VimpelCom Bearish Bets Surge as Feud Escalates: Russia Overnight

Bearish bets on VimpelCom Ltd. (VIP), the
world’s sixth-biggest mobile phone company, reached the most
expensive level this year after a conflict between shareholders
and Russian authorities intensified.

Puts with an exercise level 10 percent below VimpelCom’s
American depositary receipts’ current price cost 1.35 times more
than calls betting on a 10 percent rally yesterday, according to
data on one-month options compiled by Bloomberg. The price
relationship known as skew touched the highest level since Dec.
19. The shares sank 3.1 percent yesterday to $10.47, the most in
a month. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded
Russian stocks listed in the U.S. fell 1 percent to 93.70.

Telenor ASA (TEL), which owns 39.5 percent of the voting rights
in VimpelCom, said yesterday that Russian regulators should drop
“immediately” their lawsuit against the company and should
allow VimpelCom to pay 2011 dividends. Russia’s Anti-Monopoly
Service
, known as FAS, is disputing the Nordic company’s right
to raise its stake after it bought 11.3 percent of VimpelCom
from Weather Investments II in February.

“Investors are running away,” Ivan Manaenko, head of
research at Veles Capital LLC, said in a telephone interview
from Moscow yesterday. “Everyone is extremely concerned that
this conflict will start having an impact on the company’s
financial results, its strategy, and that it will be reflected
on the current stock price.”

The RTS stock-index futures expiring in September rose 0.7
percent to 141,200. The Market Vectors Russia ETF (RSX), the biggest
U.S.-traded exchange-traded fund that holds Russian shares,
dropped 0.7 percent to $27.69. The RTS Volatility Index rallied
2.9 percent to 32.42.

Puts to Sell Jump

A Moscow court banned Amsterdam-based VimpelCom’s Russian
unit from paying dividends on 2011 profits because of the FAS
dispute. Russian billionaire Mikhail Fridman’s Altimo, which had
initiated proceedings against Telenor, said on Aug. 15 it raised
its stake in VimpelCom to 40.5 percent of the voting rights by
purchasing 305 million shares from Egyptian billionaire Naquib Sawiris’s Weather Investments.

“We believe the lawsuit should be dropped and injunctions
withdrawn immediately,” Dag Melgaard, an Oslo-based spokesman
for Telenor, said by e-mail yesterday.

The ratio of outstanding puts to sell VimpelCom shares
versus call options to buy jumped to 0.48 on Aug. 14, the
highest level since June 5, data compiled by Bloomberg show.

Voting Rights

Puts with an exercise level 10 percent below VimpelCom’s
ADRs’ current price cost 1.14 times more than calls betting on a
10 percent rally as of yesterday, according to data on one-month
options compiled by Bloomberg.

Telenor will buy 3.5 percent of voting rights in VimpelCom
from Weather Investments by Oct. 1, increasing its stake to
almost 43 percent of voting rights in VimpelCom, Melgaard said.
Sawiris doesn’t own any more shares in VimpelCom, according to
the company.

“None of the two main shareholders want to compromise,”
Manaenko said. “When it looks like the conflict is almost
solved, one of the two does something that takes it to yet
another level, and the conflict deepens instead.”

Altimo also controls 6 percent of voting rights in VimpelCom
that are owned by Ukrainian billionaire Viktor Pinchuk’s
Bertofan Investments Ltd., Telenor’s Melgaard said.

‘Reduce the Risks’

Altimo will probably buy Bertofan’s 6 percent stake in
VimpelCom, Anna Kurbatova, an analyst at OAO Gazprombank in
Moscow, said by phone from Moscow yesterday. That would increase
Altimo’s stake to 46.5 percent of voting rights in VimpelCom.

“That would reduce the risks of further escalation of the
conflict and help achieve a balance of power between the two
major shareholders,” Kurbatova said. “Russian authorities
should be comfortable with such balance.”

Pinchuk’s EastOne Group, which says on its website that
Bertofan Investments operates under the group’s mandate, did not
return an e-mailed request for comment. The group had announced
Bertofan’s purchase of the stake in VimpelCom in a Jan. 6
statement.

Moscow-based Altimo’s Vice President Evgeny Dumalkin
declined to comment by e-mail. FAS spokeswoman Darya Silkova
declined to comment when contacted by Bloomberg News by phone
from Moscow.

Oil Near High

Oil, Russia’s biggest export earner, was little changed
near a three-month high in New York yesterday amid concern that
European leaders will fail to calm the region’s sovereign debt
crisis and as the dollar slipped against the euro.

Crude oil for September delivery settled at $95.97 on the
New York Mercantile Exchange yesterday. In intraday trading, the
contract reached $96.53, the highest level since May 11.
September oil expires today.

Brent oil for October settlement settled little changed at
$113.70 on the London-based ICE Futures Europe exchange. Urals
crude, Russia’s major export oil blend, fell 1.4 percent to
$114.04 yesterday, falling for second time in five days.

To contact the reporter on this story:
Halia Pavliva in New York at
hpavliva@bloomberg.net

To contact the editor responsible for this story:
Tal Barak Harif at
tbarak@bloomberg.net


Enlarge image
VimpelCom Bearish Bets Surge as Feud Escalates

VimpelCom Bearish Bets Surge as Feud Escalates

VimpelCom Bearish Bets Surge as Feud Escalates

Alexander Zemlianichenko Jr/Bloomberg

Telenor ASA, which owns 39.5 percent of the voting rights in VimpelCom, said yesterday that Russian regulators should drop “immediately” their lawsuit against the company and should allow VimpelCom to pay 2011 dividends.

Telenor ASA, which owns 39.5 percent of the voting rights in VimpelCom, said yesterday that Russian regulators should drop “immediately” their lawsuit against the company and should allow VimpelCom to pay 2011 dividends. Photographer: Alexander Zemlianichenko Jr/Bloomberg

Article source: http://www.bloomberg.com/news/2012-08-20/vimpelcom-bearish-bets-surge-as-feud-escalates-russia-overnight.html

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