VimpelCom Rallies on Altimo Share Conversion: Russia Overnight
VimpelCom Ltd. (VIP) gained the most in three weeks in New York on prospects Russia’s third-biggest mobile provider will use the $1.4 billion received from its largest shareholder to reduce debt and pay dividends.
American depositary receipts of VimpelCom jumped 3.5 percent to $10.55 on the New York Stock Exchange, the biggest advance since Dec. 4. The Bloomberg Russia-US Equity Index (RUS14BN) of Russian companies traded in the U.S. dropped 0.5 percent to 97.02 in New York during yesterday’s shortened trading day. RTS stock-index futures were little changed at 151,680.
Altimo Cooperatief U.A., which owns 52.7 percent of Amsterdam-based VimpelCom, will convert 128,532,000 preferred shares into common stock at $10.835 per share on April 16, 2013, according to a Dec. 24 statement. VimpelCom is set to receive the conversion sum at a time its debt-to-earnings before interest, taxes, depreciation and amortization is the third highest among telecommunication carriers, following The Hague- based Koninklijke KPN NV (KPN) and Telecom Italia SpA (TIT) of Milan.
“VimpelCom will receive money for the conversion, and given the size of its debt, this obviously adds support on dividends,” Markus Bjerke, an analyst at Arctic Securities ASA in Oslo, said by e-mail yesterday. He recommends investors hold the stock. “It’s very positive for VimpelCom.”
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, decreased 0.3 percent to $28.74, the lowest level since Dec. 7. The RTS Volatility Index, which measures expected swings in the index futures, dropped 0.7 percent to 20.95.
U.S. markets are closed today because of the Christmas holiday.
Yesterday’s advance extended VimpelCom’s surge in 2012 to 11 percent. The company’s 12-month dividend yield increased to 11.85 percent yesterday, the highest on record, as investors bought the shares on the last day to be eligible for the payment. The company’s debt-to-ebitda ratio was at 2.84 on Dec. 24, data compiled by Bloomberg show.
“A payment from Altimo is a good news for VimpelCom, because it helps ease the company’s debt burden,” Alexander Vengranovich, analyst at Otkritie Capital in Moscow, said by phone yesterday. He recommends investors hold the stock. “Investors like this kind of news, they are buying to be eligible for the dividends.”
Altimo’s stake will increase to 56.2 percent from 52.7 percent of VimpelCom following the share conversion, while voting stake will stay unchanged at 47.9 percent, according to the Dec. 24 statement.
VimpelCom will pay a dividend of 80 cents per American depositary share, including 35 cents per ADS related to 2011 results, the company said in a Dec. 17 statement.
American depositary receipts of OAO Rostelecom (ROSYY), Russia’s biggest long distance phone operator, tumbled 2.7 percent to $23.26 in New York yesterday. The stock decreased 0.8 percent to 118.88 rubles, or $3.88 in Moscow yesterday. One ADR equals six ordinary shares.
Crude for February delivery was little changed at $88.61 a barrel on the New York Mercantile Exchange yesterday. Brent oil for February settlement slipped 0.3 percent to $108.6 a barrel on the London-based ICE Futures Europe exchange yesterday, while Urals crude, Russia’s chief export blend, ended little changed at $108.66. The Standard & Poor’s GSCI gauge of 24 commodities dropped 0.1 percent to 638.59.
Ruble futures showed the currency unchanged at 31.031 per dollar yesterday.
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