EX-99.1 2 u10570exv99w1.htm EXHIBIT 99.1 exv99w1
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Exhibit 99.1
(VIMPELCOM LOGO)
 
Dear VimpelCom Ltd. shareholder:
 
As you are aware, on January 17, 2011, VimpelCom Ltd. (“VimpelCom”), Wind Telecom S.p.A. (“Wind Telecom”) and Weather Investments II S.à r.l. (“Weather II”) entered into a Share Sale and Exchange Agreement (the “Share Sale and Exchange Agreement”) providing for the proposed combination of VimpelCom and Wind Telecom (the “Transaction”).
 
The management and the Supervisory Board believe strongly in the strategic rationale for the Transaction which will create a new global telecom player with significant scale and an attractive mix of developed and emerging market assets, well-positioned to realize profitable growth.
 
Under the terms of the Share Sale and Exchange Agreement, at closing VimpelCom will purchase up to 100%, but not less than 98.04%, of the shares of Wind Telecom from Weather II and the other Wind Telecom shareholders that become party to the Share Sale and Exchange Agreement (the “Wind Telecom Shareholders”) in exchange for up to 325,639,827 VimpelCom common shares, 305,000,000 VimpelCom preferred shares and up to US$1.495 billion in cash.
 
Closing of the Transaction is subject to VimpelCom shareholder approval of the creation and issuance of VimpelCom common shares and convertible preferred shares as described herein and satisfaction or waiver of the other conditions specified in the Share Sale and Exchange Agreement.
 
VimpelCom will hold a special general meeting of its shareholders (the “Special General Meeting”) on March 17, 2011 at 10 a.m. Central European Time at Claude Debussylaan 15, 1082 MC Amsterdam, The Netherlands for the following purposes:
 
(1) to approve, for the purposes of bye-law 55.4(f) of the bye-laws of VimpelCom, the issuance by VimpelCom of up to 325,639,827 common shares of VimpelCom and of 305,000,000 convertible preferred shares of VimpelCom pursuant to the terms of the Share Sale and Exchange Agreement relating to the acquisition by VimpelCom of Wind Telecom approved by the Supervisory Board on January 16, 2011 (the “Share Issuance Proposal”); and
 
(2) to increase the authorized share capital of VimpelCom to US$3,114,171.83 by the creation of 630,639,827 new common shares of par value US$0.001 each in VimpelCom and of 305,000,000 new convertible preferred shares of par value US$0.001 each in VimpelCom, the new shares having the rights and being subject to the conditions set out in the VimpelCom bye-laws (the “Authorized Share Capital Increase Proposal”).
 
The formal notice of the Special General Meeting was issued by VimpelCom on January 17, 2011.
 
AFTER CAREFUL CONSIDERATION OF THE TRANSACTION, VIMPELCOM’S SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE SHARE ISSUANCE PROPOSAL AND THE AUTHORIZED SHARE CAPITAL INCREASE PROPOSAL.
 
The affirmative vote of a majority of the votes cast at the Special General Meeting at which a quorum is present will be required to approve the Share Issuance Proposal and the Authorized Share Capital Increase Proposal. Only the holders of record of VimpelCom shares at the close of business on January 31, 2011, the record date for the Special General Meeting, are entitled to vote at the Special General Meeting under Bermuda law and the VimpelCom bye-laws.
 
VimpelCom shareholders are requested to complete and return the proxy form, voting card or voting instruction form (as relevant to how your shares are held) to ensure that their common shares will be represented at the Special General Meeting. If you have any questions, you may contact our proxy solicitors, D. F. King & Co. Inc., by (i) telephone, toll-free from North America at +1 800 431 9645, toll-free from Continental Europe at


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00 800 5464 5464, at +1 212 269 5550 or +44 207 920 9700; (ii) mail to 48 Wall Street, 22nd Floor, New York NY 10005, USA or 1 Ropemaker Street, 34th Floor, London EC2Y 9HT; or (iii) email to vimpelcom@dfking.com.
 
The enclosed proxy statement gives you information about the Transaction, Wind Telecom and the proposals before the Special General Meeting. We encourage you to read the entire proxy statement carefully.
 
Once again, management and the Supervisory Board strongly believe that the combination of VimpelCom and Wind Telecom will expand our platform to create long-term shareholder value by giving us the opportunity to capture future growth in emerging markets, strengthen our ability to capture additional growth following the paradigm shift from voice to data and secure greater scale and scope ahead of further industry consolidation. Consequently, we encourage you to vote in favor of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal.
 
Thank you for your continuing support of VimpelCom.
 
Sincerely,
 
 
Alexander Izosimov
CEO
 
Dated: February 14, 2011


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VIMPELCOM LTD.
 
Claude Debussylaan 15
1082 MC Amsterdam
The Netherlands
 
Victoria Place
31 Victoria Street
Hamilton HM 10
Bermuda
 
PROXY STATEMENT
 
February 14, 2011
 
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NOTICE TO SHAREHOLDERS IN THE UNITED STATES
 
VimpelCom Ltd. (“VimpelCom”) is a company existing under the laws of Bermuda. This solicitation is being conducted in accordance with the proxy solicitation rules under applicable Bermuda laws. The proxy solicitation rules under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), are not applicable to VimpelCom or this solicitation, and accordingly, this solicitation is not being effected in accordance with such rules. This proxy statement therefore may not contain all of the disclosure required to be included in proxy statements prepared in accordance with the proxy solicitation rules under the Exchange Act. Shareholders should be aware that disclosure requirements under Bermuda law may be different from requirements under U.S. laws relating to U.S. companies.


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QUESTIONS AND ANSWERS
 
The following questions and answers highlight selected information from this proxy statement and may not contain all the information that is important to you. These questions and answers are not meant to be a substitute for the information contained in the remainder of this proxy statement, and this information is qualified in its entirety by the more detailed descriptions and explanations contained in this proxy statement including, without limitation, any additional documents incorporated by reference into this proxy statement. Accordingly, we urge you to read this entire proxy statement and any documents incorporated by reference into this proxy statement carefully. Capitalized terms not defined in these questions and answers are defined in “Glossary of Defined Terms”.
 
Q: What is this document?
 
A: This document is a proxy statement prepared by management of VimpelCom in advance of the special general meeting of its shareholders on March 17, 2011 (the “Special General Meeting”). This proxy statement provides additional information about the business of the Special General Meeting, Wind Telecom and the Transaction. A proxy form, voting card or voting instruction form (as relevant to how your shares are held) accompanies this proxy statement.
 
Q: What is happening at the shareholder meeting?
 
A: At the Special General Meeting, VimpelCom shareholders will be asked to vote on the following proposals:
 
(1) to approve, for the purposes of bye-law 55.4(f) of the bye-laws of VimpelCom, the issuance by VimpelCom of up to 325,639,827 common shares of VimpelCom and of 305,000,000 convertible preferred shares of VimpelCom pursuant to the terms of the Share Sale and Exchange Agreement relating to the acquisition by VimpelCom of Wind Telecom approved by the Supervisory Board on January 16, 2011 (the “Share Issuance Proposal”); and
 
(2) to increase the authorized share capital of VimpelCom to US$3,114,171.83 by the creation of 630,639,827 new common shares of par value US$0.001 each in VimpelCom and of 305,000,000 new convertible preferred shares of par value US$0.001 each in VimpelCom, the new shares having the rights and being subject to the conditions set out in the VimpelCom bye-laws (the “Authorized Share Capital Increase Proposal”).
 
Q: What will happen in the Transaction?
 
A: If VimpelCom shareholders adopt the resolutions and approve the Share Issuance Proposal and Authorized Share Capital Increase Proposal, and all other conditions to the Transaction have been satisfied or waived, at Closing, VimpelCom will acquire all the Wind Telecom shares held by Weather II and the Wind Telecom Shareholders. Under the Share Sale and Exchange Agreement, VimpelCom is not required to close unless it will acquire at Closing shares representing at least 98.04% of Wind Telecom’s share capital (excluding shares held by Wind Telecom’s subsidiary, WAHF). VimpelCom will acquire these shares in exchange for consideration consisting of (i) up to 325,639,827 newly issued VimpelCom common shares, (ii) 305,000,000 newly issued convertible preferred shares and (iii) up to US$1.495 billion in cash.
 
At or after Closing, Wind Telecom’s interest in certain assets, which principally comprise OTH’s investments in Egypt and North Korea and certain non-core Wind Italy assets, will be transferred to Weather II, or if such transfers cannot be effected, VimpelCom will make certain payments to Weather II. See “The Spin-Off Plan”, for more details.
 
Q: Why is VimpelCom proposing to enter in the Transaction?
 
A: In evaluating the Share Sale and Exchange Agreement, VimpelCom’s Supervisory Board consulted with VimpelCom’s management and its legal and financial advisors, and, in reaching its decision to approve the Share Sale and Exchange Agreement and recommend that the shareholders of VimpelCom vote in favor of the


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Share Issuance Proposal and the Authorized Share Capital Increase Proposal, the Supervisory Board considered a number of factors, which it viewed as generally supporting its determination, including, among others:
 
• the opportunity for VimpelCom to secure the advantages of scale and scope in a rapidly evolving and consolidating industry, by becoming a top-tier global telecoms company with a global footprint and a broad product range;
 
• the opportunity to position the company to take maximum advantage of the anticipated paradigm shift in the telecoms industry from voice to data;
 
• the opportunity to drive profitable growth by developing a balanced portfolio of high-quality assets with a broad presence in both mature and emerging and developing markets and by leveraging Wind Telecom’s experience in highly-developed data markets such as Italy and in low-cost under-penetrated mobile markets such as Pakistan and Bangladesh;
 
• the opportunity to acquire these assets on attractive financial terms which would allow the company to optimize its capital structure, minimize dilution for its shareholders and retain its dividend policy; and
 
• other factors described in “VimpelCom’s Reasons for the Transaction; Recommendation of VimpelCom’s Supervisory Board”.
 
Q: Does VimpelCom’s Supervisory Board recommend approval of the proposals?
 
A: Yes. The Supervisory Board recommends that you vote “FOR” each resolution. At the meeting of the Supervisory Board held on January 16, 2011, six of the nine directors on the Supervisory Board voted in favor of the Transaction and voted to recommend to shareholders approval of the Share Issuance Proposal and Authorized Share Capital Increase Proposal. These six directors included the three directors nominated by our shareholder Altimo and the three independent directors. The three directors nominated by our shareholder Telenor voted against the Transaction and against recommending that the shareholders vote in favor of the Share Issuance Proposal and Authorized Share Capital Increase Proposal.
 
Q: What will be the composition of VimpelCom’s Supervisory Board following the Closing of the Transaction?
 
A: Upon the Closing, the composition of VimpelCom’s Supervisory Board is not expected to change.
 
Q: When do the parties expect to close the Transaction?
 
A: The parties expect to close the Transaction in the first half of 2011, although there can be no assurance that the parties will be able to do so.
 
Q: What other conditions must be satisfied to close the Transaction?
 
A: Closing of the Transaction is subject to the approval by our shareholders of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal, receipt of regulatory approvals in Italy, Pakistan and Ukraine, the completion of actions and transactions required to be completed before Closing and as of Closing as set out in the Refinancing Plan, the execution and delivery of the Ancillary Agreements at Closing, the completion of the Wind Hellas Spin-Off from the Wind Telecom Group, the absence of any order enacted by any governmental entity, court or arbitration tribunal making the transfer of the Wind Telecom Shares to VimpelCom, the issuance of the VimpelCom common shares or VimpelCom convertible preferred shares or the completion of the spin-off transactions pursuant to the Spin-off Plan illegal or otherwise prohibiting such transfer or transactions, and other conditions to Closing described in “The Share Sale and Exchange Agreement — Conditions to Closing”.
 
Q: What percentage of VimpelCom’s common shares and total voting shares will Weather II and the Wind Telecom Shareholders own, in the aggregate, after the Transaction?
 
A: Based on VimpelCom’s capitalization as of January 31, 2011, the record date for the Special General Meeting (the “Record Date”), VimpelCom estimates that, assuming VimpelCom acquires 100% of the shares of Wind Telecom at Closing, following the Closing Weather II and the Wind Telecom Shareholders would own, in the aggregate, approximately 20.0% of the issued and outstanding VimpelCom common shares and approximately


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30.6% of the issued and outstanding voting shares, and Telenor and Altimo would own approximately 31.7% and 31.4%, respectively, of the issued and outstanding VimpelCom common shares and approximately 25.0% and 31.0%, respectively, of the issued and outstanding voting shares. See “Risk Factors — Risk Factors Relating to the Transaction — Telenor opposes the Transaction and has challenged it” and “Risk Factors — Risk Factors Relating to the Transaction — If Telenor is successful in the Arbitration Proceedings, it could lead to significant dilution to VimpelCom’s minority shareholders”, for a description of Telenor’s challenge to the Transaction and possible further dilution if Telenor prevails in its challenge.
 
Q: What shareholder vote is required to approve the proposals at the Special General Meeting and how many votes must be present to hold the meetings?
 
A: The affirmative vote of a majority of the votes cast at the Special General Meeting, at which a quorum is present in accordance with VimpelCom’s bye-laws, is required to approve the Share Issuance Proposal and the Authorized Share Capital Increase Proposal. The quorum required at the Special General Meeting is two or more persons present in person at the start of the meeting having the right to attend and vote at the meeting and holding or representing in person or by proxy at least 50% plus one voting share of the total issued voting shares in VimpelCom.
 
Q: Am I entitled to dissenter rights?
 
A: No. VimpelCom shareholders are not entitled to dissenter rights in connection with the actions to be taken at the Special General Meeting.
 
Q: How do I vote my shares?
 
A: Registered holders of VimpelCom shares — If you are a holder of record of VimpelCom shares, meaning that your name appears in VimpelCom’s Register of Members at the close of business on the Record Date, you will receive a proxy form from VimpelCom. Please mark, date and sign the form and return it in the envelope provided or vote your shares at the meeting. Proxy forms must be received on or before the voting deadline of March 16, 2011 at 10:00 a.m. Central European Time. Registered holders of VimpelCom shares can also vote at the meeting by ballot.
 
Registered holders of VimpelCom ADSs — If you are a holder of record of VimpelCom American Depository Shares (“VimpelCom ADSs”), meaning that your VimpelCom ADSs are evidenced by physical certificated American Depositary Receipts or book entries in your name so that you appear as a VimpelCom ADS holder in the register maintained by the Depositary at the close of business on the Record Date, you will receive a voting card from the Depositary with instructions on how to instruct the Depositary to vote the VimpelCom common shares represented by your VimpelCom ADSs. Please mark, date and sign the card and return it in the envelope provided. Voting cards must be received on or before the voting deadline fixed by the Depositary of March 11, 2011 at 5:00 p.m. New York Time.
 
Street name holders of VimpelCom ADSs — If you hold VimpelCom ADSs through a bank, broker or other nominee (in “street name”), you should receive a voting instruction form from your bank, broker or other nominee that you may use to instruct them on how to vote your VimpelCom ADSs. Your bank, broker or other nominee may allow for Internet and/or telephone voting. Please consult the voting instruction form received or your bank, broker or other nominee to determine if you can give voting instructions by Internet or telephone. If you cannot vote by Internet or telephone, please mark, date and sign the voting instruction form and return it in the envelope provided. Voting instruction forms must be received on or before the voting deadline fixed by the Depositary of March 11, 2011 at 5:00 p.m. New York Time.
 
See “The Special General Meeting”, for a discussion of voting procedures.
 
Q: Can I attend the Special General Meeting?
 
A: Attendance at our Special General Meeting is limited to our shareholders, holders of VimpelCom ADSs and their authorized representatives. All shareholders and VimpelCom ADS holders must bring an acceptable form of identification, such as a driver’s license or passport, in order to attend our Special General Meeting in person. In addition, if you hold VimpelCom ADSs in “street name” and would like to attend our Special General


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Meeting, you will need to bring an account statement or other acceptable evidence of ownership of VimpelCom ADSs as of the close of business on the Record Date. Any representative of a shareholder who wishes to attend must present acceptable documentation evidencing his or her authority, acceptable evidence of ownership by the shareholder as described above and an acceptable form of identification. We reserve the right to limit the number of representatives for any shareholder who may attend the meeting.
 
Q: Can I vote my shares in person at the Special General Meeting?
 
A: Registered holders of VimpelCom shares can vote at the Special General Meeting by ballot. If you are a VimpelCom ADS holder, you may not vote your shares in person at the Special General Meeting unless you obtain a “legal proxy” giving you the right to vote the shares at the Special General Meeting. Even if you plan to attend the Special General Meeting, we recommend that you also submit your proxy form, voting card or voting instructions as described in the proxy statement so that your vote will be counted if you later decide not to attend the meeting. See “The Special General Meeting”, for a discussion of voting procedures.
 
Q: How will my shares be voted if I give my voting instruction?
 
If you give a proxy form, voting card or voting instruction, the shares represented by the proxy form, voting card or voting instruction will be voted or withheld from voting, in accordance with your instructions as indicated in the proxy form, voting card or voting instruction on each resolution. In the absence of instructions from you in the proxy form, voting card or voting instruction as to how you wish your votes to be cast, such share will be voted FOR all of the resolutions at the Special General Meeting in accordance with the Supervisory Board’s recommendation.
 
Q: What effect do abstentions have on the proposals?
 
A: Abstentions will be counted toward the presence of a quorum at, but will not be considered votes cast on any proposal brought before, the Special General Meeting.
 
Q: What do I do if I want to change my vote?
 
A: If you are a registered holder of VimpelCom shares, you can revoke your proxy by signing, dating and returning a completed proxy form with a later date or by attending the Special General Meeting and voting in person. If you are a registered holder of VimpelCom shares, your proxy forms must be received on or before the voting deadline of March 16, 2011 at 10:00 a.m. Central European Time.
 
If you are a registered VimpelCom ADS holder, voting cards must be received on or before the voting deadline fixed by the Depositary of March 11, 2011 at 5:00 p.m. New York Time. You may change your vote by following the instructions on your voting card to vote again. Registered VimpelCom ADS holders who need another copy of their voting card may call our proxy solicitor D. F. King & Co., Inc. toll-free from North America at +1 800 431 9645, toll-free from Continental Europe at 00800 5464 5464, or +1 212 269 5550 or +44 207 920 9700 (from other locations). Please note that the last instructions received by the Depositary by the voting deadline will be the voting instructions followed by the Depositary.
 
If you hold your VimpelCom ADSs in street name and wish to change your vote, you should follow the instructions provided by your bank, broker or other nominee.
 
Q: What if amendments are made to these matters or other business is brought before the Special General Meeting?
 
A: The accompanying proxy form, voting card or voting instruction confers discretionary authority on the proxy holders who will vote your VimpelCom shares or the VimpelCom shares underlying your VimpelCom ADSs with respect to any amendments or variations to the matters identified in the notice of the Special General Meeting distributed to shareholders or other matters that may properly come before the Special General Meeting, and the named proxies will vote on such matters in accordance with their judgment.
 
Q: What do I need to do now?
 
A: You are urged to read carefully this proxy statement, including its annexes and any documents incorporated by reference into this proxy statement. You also may want to review the documents referenced under “Where You Can Find More Information” and consult with your accounting, legal and tax advisors. Once you have


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considered all relevant information, you are encouraged to follow the voting instructions on the proxy form (if you are a registered holder of VimpleCom shares), or on the voting card provided to you by the Depositary (if you are a holder of record of VimpelCom ADSs) or the voting instruction form you receive from your bank, broker or other nominee (if you hold your VimpelCom ADSs in street name).
 
Q: Whom can I contact with any additional questions?
 
A: If you have additional questions about the proposals or the Transaction, if you would like additional copies of this proxy statement, or if you need assistance voting your VimpelCom common shares or VimpelCom ADSs, you should contact D. F. King & Co., Inc. by any of the following methods:
 
Mail
 
48 Wall Street, 22nd Floor
New York, NY 10005

1 Ropemaker Street, 34th Floor
London, EC2Y 9HT
 
Email
 
vimpelcom@dfking.com
 
Phone
 
+1 800 431 9645 (toll-free from North America)
00800 5464 5464 (toll-free from Continental Europe)
+1 212 269 5550 (banks and brokers call collect)
+44 207 920 9700 (from other locations)
 
Q: Who pays for the cost of proxy preparation and solicitation?
 
A: VimpelCom will bear the costs of this solicitation in connection with the Special General Meeting. Solicitation will be made by mail, telephone, facsimile, telegraph, the Internet, e-mail, newspapers and other publications of general distribution and in person and may be made by VimpelCom’s directors, officers and employees, personally or by telephone or e-mail. Proxy forms, voting cards or voting instruction forms and materials will be distributed to registered holders of VimpelCom’s common shares by VimpelCom, to registered holders of VimpelCom ADSs through the Depositary and to beneficial owners of VimpelCom ADSs through brokers, custodians, nominees and other parties. VimpelCom expects to reimburse such parties for their charges and expenses.
 
VimpelCom has retained D. F. King & Co., Inc. to assist with soliciting shareholder proxies, and D. F. King & Co., Inc. will receive customary fees plus reimbursement of expenses.
 
Q: Where can I find more information about VimpelCom?
 
A: You can find more information about VimpelCom in the documents described under “Where You Can Find More Information”.


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SUMMARY
 
Unless the context otherwise requires, references to “we,” “us”, “our”, “VimpelCom” or the “Company” refer to VimpelCom Ltd. This summary highlights selected information from this proxy statement but may not contain all of the information that may be important to you. Accordingly, we encourage you to read carefully this entire proxy statement and any documents incorporated by reference into this proxy statement to understand the proposals and the terms of the Share Sale and Exchange Agreement (the “Share Sale and Exchange Agreement”), dated as of January 17, 2011, by and among VimpelCom, Wind Telecom S.p.A., which until December 30, 2010 was known as Weather Investments S.p.A (“Wind Telecom”), Weather Investments II S.à r.l. (“Weather II”) and the other shareholders of Wind Telecom that become party to the Share Sale and Exchange Agreement (the “Wind Telecom Shareholders”), pursuant to which at closing (the “Closing) VimpelCom will acquire shares in Wind Telecom held by Weather II and the Wind Telecom Shareholders (the “Wind Telecom Shares”). In this proxy statement we refer to the transactions under the Share Sale and Exchange Agreement collectively as the “Transaction”.
 
The Parties to the Transaction
 
VimpelCom
 
The VimpelCom group consists of telecommunications operators providing voice and data services through a range of wireless, fixed and broadband technologies. We are headquartered in Amsterdam and have operations in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikstan, Georgia, Armenia, Kyrgyzstan, Vietnam and Cambodia, covering territory with a total population of about 345 million. Our operating companies provide services under the “Beeline” and “Kyivstar” brands. VimpelCom American Depositary Shares (“VimpelCom ADSs”) are listed on the New York Stock Exchange under the symbol “VIP”. VimpelCom, through its subsidiaries, had 92 million subscribers as of September 30, 2010.
 
Telenor ASA indirectly through its wholly owned subsidiary Telenor East Holdings II AS (collectively, “Telenor”) presently owns a 39.6% economic interest and 36.0% voting interest in VimpelCom, and Altimo Holdings & Investments Limited indirectly through its wholly owned subsidiary Altimo Cooperatief U.A. (collectively, “Altimo”) presently owns a 39.2% economic interest and 44.7% voting interest in VimpelCom.
 
Wind Telecom
 
The Wind Telecom group consists of telecommunications operators providing mobile, fixed, Internet and international communication services in Europe, North America, Africa, the Middle East and Asia. Wind Telecom owns 100% of Wind Telecomunicazioni S.p.A. (“Wind Italy”) which operates GSM networks in Italy, and 51.7% of Orascom Telecom Holding S.A.E. (“OTH”), which in turn operates GSM networks in Algeria, Bangladesh, Egypt, Pakistan, North Korea, Zimbabwe, Namibia, the Central African Republic and Burundi, and in Canada through its indirect equity ownership in Globalive Wireless. Wind Telecom, through its subsidiaries, had 117 million subscribers worldwide as of September 30, 2010 (excluding operations that have been divested since such date).
 
Wind Telecom is owned 67.02% by Weather II, which is itself owned by the members of the Sawiris family, 23.42% by certain private equity investors (“Wind Telecom Investors”), 1.81% by other Wind Telecom shareholders (“Wind Telecom Minority Shareholders”) and 7.76% by its 99.99% subsidiary Wind Acquisition Holdings Finance S.p.A. (“WAHF”). Excluding the Wind Telecom shares held by WAHF, Wind Telecom is owned 72.65% by Weather II, 25.39% by the Wind Telecom Investors and 1.96% by the Wind Telecom Minority Shareholders.
 
See “Description of the Business of Wind Telecom”, for more information.
 
The Transaction
 
General Description
 
On January 17, 2011, VimpelCom entered into the Share Sale and Exchange Agreement with Wind Telecom and Weather II. Subject to the approval of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal and satisfaction or waiver of the other conditions specified in the Share Sale and Exchange Agreement, at Closing VimpelCom will acquire the Wind Telecom Shares in exchange for a combination of cash, common shares


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and convertible preferred shares. Pursuant to the Share Sale and Exchange Agreement, VimpelCom is not required to close unless it will acquire at Closing shares representing at least 98.04% of Wind Telecom’s share capital (excluding shares held by Wind Telecom’s subsidiary, WAHF). At or after Closing, Wind Telecom’s interests in certain assets will be transferred to Weather II, or if such transfers cannot be effected, VimpelCom will make certain cash payments to Weather II, as described in “The Spin-Off Plan”. Prior to Closing, Weather Finance I S.à r.l. and Hellas Telecommunications S.à r.l. and each of their subsidiaries (the “Wind Hellas Group”), which includes Wind Hellas Telecommunications S.A. (“Wind Hellas”), together with all assets and liabilities of the Wind Hellas Group will be disposed of (the “Wind Hellas Spin-off”).
 
See “The Transaction — General Background and Description”, for more information.
 
Reasons for the Transaction; Recommendation of the VimpelCom Supervisory Board
 
In evaluating the Share Sale and Exchange Agreement, VimpelCom’s Supervisory Board consulted with VimpelCom’s management and its legal and financial advisors, and, in reaching its decision to approve the Share Sale and Exchange Agreement and recommend that the shareholders of VimpelCom vote in favor of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal, the Supervisory Board considered a number of factors, which it viewed as generally supporting its determination, including, among others:
 
  •  the opportunity for VimpelCom to secure the advantages of scale and scope in a rapidly evolving and consolidating industry, by becoming a top-tier global telecoms company with a global footprint and a broad product range;
 
  •  the opportunity to position the company to take maximum advantage of the anticipated paradigm shift in the telecoms industry from voice to data;
 
  •  the opportunity to drive profitable growth by developing a balanced portfolio of high-quality assets with a broad presence in both mature and emerging and developing markets and by leveraging Wind Telecom’s experience in highly-developed data markets such as Italy and in low-cost under-penetrated mobile markets such as Pakistan and Bangladesh;
 
  •  the opportunity to acquire these assets on attractive financial terms which would allow the company to optimize its capital structure, minimize dilution for its shareholders and retain its dividend policy; and
 
  •  other factors described in “VimpelCom’s Reasons for the Transaction; Recommendation of VimpelCom’s Supervisory Board”.
 
In connection with the Transaction, VimpelCom engaged UBS Investment Bank (“UBS”) and Deutsche Bank (“Deutsche Bank”) to act as its financial advisors. Additionally, Citigroup Global Markets (“Citi”) acted as financial advisor to the Supervisory Board of VimpelCom.
 
The Special General Meeting
 
We will hold a special general meeting of shareholders of VimpelCom (the “Special General Meeting”) on March 17, 2011 at 10 a.m. Central European Time for the following purposes:
 
(1) to approve, for the purposes of bye-law 55.4(f) of the bye-laws of VimpelCom, the issuance by VimpelCom of up to 325,639,827 common shares of VimpelCom and of 305,000,000 convertible preferred shares of VimpelCom pursuant to the terms of the Share Sale and Exchange Agreement relating to the acquisition by VimpelCom of Wind Telecom approved by the Supervisory Board on January 16, 2011 (the “Share Issuance Proposal”); and
 
(2) to increase the authorized share capital of VimpelCom to US$3,114,171.83 by the creation of 630,639,827 new common shares of par value US$0.001 each in VimpelCom and of 305,000,000 new convertible preferred shares of par value US$0.001 each in VimpelCom, the new shares having the rights and being subject to the conditions set out in the VimpelCom bye-laws (the “Authorized Share Capital Increase Proposal”).


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The VimpelCom convertible preferred shares to be issued to Weather II and the Wind Telecom Shareholders may be converted into VimpelCom common shares any time between 2.5 years and 5 years after their issuance at a price based on the NYSE price for VimpelCom ADSs. Pursuant to VimpelCom’s bye-laws, VimpelCom must reserve and keep available out of its authorized but unissued common shares not less than the number of common shares issuable on conversion of its convertible preferred shares outstanding. Accordingly, the Authorized Share Capital Increase Proposal contemplates the creation of not only the shares to be issued pursuant to the Share Issuance Proposal, but also an additional 305,000,000 common shares issuable on conversion of the convertible preferred shares being issued at Closing.
 
Registered holders of record of VimpelCom shares will be entitled to vote at the Special General Meeting or any adjournement or postponement thereof. You are the registered holder of record of VimpelCom shares if your VimpelCom shares are registered in your name on VimpelCom’s Register of Members at the close of business on January 31, 2011, the record date for the Special General Meeting (the “Record Date”). Holders of record of VimpelCom shares will receive a proxy card from VimpelCom and will be entitled to vote by mail or at the Special General Meeting.
 
Holders of record of VimpelCom ADSs will be entitled to instruct the Bank of New York Mellon, the depositary for the VimpelCom ADSs (the “Depositary”), as to the exercise of voting rights pertaining to the VimpelCom common shares represented by such holder’s VimpelCom ADSs. You are a holder of record of VimpelCom ADSs if your VimpelCom ADSs are evidenced by physical certificated American Depositary Receipts or book entries in your name so that you appear as a VimpelCom ADS holder in the register maintained by the Depositary at the close of business on the Record Date. Holders of record of VimpelCom ADSs will receive a voting card from the Depositary with instructions on how to instruct the Depositary to vote the VimpelCom common shares represented by such holder’s VimpelCom ADSs.
 
If you hold VimpelCom ADSs through a bank, broker or other nominee in “street name”, you may receive from that institution a voting instruction form that you may use to instruct them on how to cause your VimpelCom ADSs to be voted. See “The Special General Meeting”, for more information.
 
The Share Sale and Exchange Agreement
 
On January 17, 2011, VimpelCom entered into the Share Sale and Exchange Agreement with Wind Telecom and Weather II pursuant to which the parties agreed to effect the Transaction on and subject to the terms of the Share Sale and Exchange Agreement. The following is a summary of certain provisions of the Share Sale and Exchange Agreement and does not purport to be complete. See “The Share Sale and Exchange Agreement”.
 
The Transaction Consideration
 
Under the terms of the Share Sale and Exchange Agreement, at Closing VimpelCom will acquire the Wind Telecom Shares for consideration consisting of the following: (i) up to 325,639,827 VimpelCom common shares, (ii) 305,000,000 VimpelCom convertible preferred shares, and (iii) up to $1.495 billion in cash. See “The Share Sale and Exchange Agreement — The Transaction Consideration”. As additional consideration, at or after Closing, Wind Telecom’s interest in certain assets will be transferred to Weather II, or if such transfers cannot be effected, VimpelCom will make certain cash payments to Weather II as described in “The Spin-Off Plan”.
 
Dividends
 
Under the terms of the Share Sale and Exchange Agreement, Weather II and the Wind Telecom Shareholders irrevocably direct VimpelCom not to make payment to them of dividends declared during or with respect to the 2010 financial year on VimpelCom common shares. This direction only applies to the first US$850 million declared and paid out with respect to the 2010 financial year. Prior to entering into the Share Sale and Exchange Agreement VimpelCom had already declared and paid out US$600 million in interim dividends with respect to the 2010 financial year. The Share Sale and Exchange Agreement further provides that VimpelCom will declare US$850 million (hence a further $250 million) in interim dividends on VimpelCom common shares in respect of the 2010 financial year, but other than with respect to those dividends, VimpelCom is not permitted to set as a record date for


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any additional dividends to holders of VimpelCom common shares any date occurring prior to June 1, 2011. See “The Share Sale and Exchange Agreement — Covenants — Dividends”.
 
Restrictions on Solicitation
 
Under the terms of the Share Sale and Exchange Agreement, from the time the Share Issuance Proposal and the Authorized Share Capital Increase Proposal approved by VimpelCom shareholders (the “Obligation Date”) until Closing, VimpelCom covenants not to, and to not permit any of its officers, directors, affiliates, agents or representatives to, solicit, initiate, encourage, conduct or engage in any discussions, or enter into any agreement or understanding, with any other person or entity relating to the merger, business combinations, recapitalization or similar corporate event involving VimpelCom or any of its subsidiaries or relating to the sale of any of the shares or capital stock of VimpelCom or any of its subsidiaries or any material portion of the assets of VimpelCom or any of its subsidiaries. Wind Telecom and Weather II make the same covenant. See “The Share Sale and Exchange Agreement — Covenants — Restrictions on Solicitation”.
 
Conditions to Closing
 
The respective obligation of each party to close the transactions contemplated by the Share Sale and Exchange Agreement is subject to the satisfaction or waiver of the following conditions:
 
  •  no governmental entity, court or arbitration tribunal will have enacted, promulgated, enforced or entered any statute, rule, regulation, injunction or other order that makes the transfer of the Wind Telecom Shares to VimpelCom, the issuance of VimpelCom common shares or VimpelCom convertible preferred shares or payment of the cash consideration to Weather II and the Wind Telecom Shareholders or the completion of the spin-off transactions pursuant to the Spin-Off Plan illegal or otherwise prohibiting such transfer and transactions;
 
  •  all consents required under the competition and antitrust laws of Ukraine, Pakistan and Italy and the approval of the Pakistan Telecommunications Authority will have been obtained (including the termination of any applicable waiting periods) without material conditions or restrictions;
 
  •  shareholder approval of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal will have been obtained; and
 
  •  the actions and transactions that are required to be completed before Closing and as of Closing as set out in the Refinancing Plan will have been completed.
 
Other conditions to Closing are described in “The Share Sale and Exchange Agreement — Conditions to Closing”.
 
Termination of the Share Sale and Exchange Agreement
 
The Share Sale and Exchange Agreement may be terminated, at any time prior to the Closing date,
 
  •  by mutual written consent of the boards of directors, or equivalent governing bodies, of Wind Telecom and VimpelCom;
 
  •  by either Wind Telecom or VimpelCom at any time on or prior to the Obligation Date;
 
  •  by either Wind Telecom or VimpelCom if Closing shall not have occurred on or prior to June 30, 2011; and
 
  •  by either Wind Telecom or VimpelCom if any governmental entity, court or arbitration tribunal has enacted, issued, promulgated, enforced, or entered any statute, rule, regulation, injunction or other order which is in effect and has the effect of making the transfer of the Wind Telecom Shares, the issuance of VimpelCom shares or payment of cash consideration to Weather II and the Wind Telecom Shareholders or completion of the spin-off transactions pursuant to the Spin-Off Plan illegal or otherwise prohibiting consummation of such transfers and transaction and such statute, rule, regulation, injunction or other order has become final and non-appealable.


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The Share Sale and Exchange Agreement does not impose any break fee on the terminating party.
 
See “The Share Sale and Exchange Agreement — Termination of the Share Sale and Exchange Agreement”.
 
Effects of Termination
 
If either Wind Telecom or VimpelCom validly terminates the Share Sale and Exchange Agreement, the Share Sale and Exchange Agreement will terminate and have no further effect, except for certain provisions that survive such termination. Except with respect to termination by Wind or VimpelCom prior to the Obligation Date, no party will be relieved or released from any liabilities or damages incurred or suffered by a party, to the extent such liabilities or damages were the result of fraud or wilful and material breach.
 
The Refinancing Plan
 
In connection with the Transaction, the parties have agreed a refinancing plan (the “Refinancing Plan”). The Refinancing Plan covers financings by VimpelCom to fund the Transaction and refinancings by Wind Telecom entities primarily to obtain consent for a change of control on Closing and also to modify other covenants and refinance debt either to obtain more favorable terms or to extend its maturity. Under the terms of the Share Sale and Exchange Agreement, Wind Telecom, Weather II and VimpelCom must use their reasonable best efforts to do, or cause to be done, all things necessary, proper or advisable to effect the Refinancing Plan. See “The Refinancing Plan”.
 
The Spin-Off Plan
 
As part of the Transaction, the parties have agreed a plan pursuant to which Wind Telecom’s interest in certain assets of the Wind Telecom group will be transferred to Weather II at or following Closing (“Spin-Off Plan”). The Spin-Off Plan also provides that if such transfers cannot be effected, VimpelCom will make certain cash payments to Weather II. Under the terms of the Share Sale and Exchange Agreement, Wind Telecom, Weather II and VimpelCom must use their reasonable best efforts to do, or cause to be done, all things necessary, proper or advisable to effect the Spin-Off Plan. See “The Spin-Off Plan”.
 
The MobiNil/ECMS Plan
 
In connection with the Transaction, the parties have agreed a plan relating to the exercise of control over OTH’s shares in MobiNil Telecommunications S.A.E. (“MobiNil”) and the Egyptian Company for Mobile Services (“ECMS”), which plan is referred to in this proxy statement as the “MobiNil/ECMS Plan”. Under the terms of the Share Sale and Exchange Agreement, Wind Telecom, Weather II and VimpelCom must use their reasonable best efforts to do, or cause to be done, all things necessary, proper or advisable to effect the MobiNil/ECMS Plan. See “The MobiNil/ECMS Plan”.
 
The Ancillary Agreements
 
Pursuant to the Share Sale and Exchange Agreement, the parties are to enter into the following agreements at Closing:
 
  •  an interim control agreement among OTH, Wind Telecom and VimpelCom (the “Interim Control Agreement”), which contains the MobiNil/ECMS Plan;
 
  •  a lock-up agreement between Weather II and VimpelCom (the “Lock-Up Agreement”);
 
  •  a share escrow agreement between Weather II and VimpelCom (the “Share Escrow Agreement”);
 
  •  a registration rights agreement between Weather II and VimpelCom (the “Weather II Registration Rights Agreement”);
 
  •  a framework agreement among Wind International Services S.p.A (“WIS”), one of the entities being transferred to Weather II pursuant to the Spin-Off Plan, Weather II and VimpelCom (the “WIS Framework Agreement”);
 
  •  a value sharing agreement between Weather II and VimpelCom (the “Algerian Value Sharing Agreement”);


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  •  a separation agreement with respect to OTH, among OTH, Wind Telecom, Weather II and VimpelCom (the “OTH Separation Agreement”); and
 
  •  a separation agreement with respect to Wind Italy among Wind Italy, Wind Telecom, Weather II and VimpelCom (the “Wind Separation Agreement”).
 
The Interim Control Agreement, the Lock-Up Agreement, the Share Escrow Agreement, the Weather II Registration Rights Agreement, the WIS Framework Agreement, the Algerian Value Sharing Agreement, the OTH Separation Agreement and the Wind Separation Agreement are referred to in this proxy statement collectively as the “Ancillary Agreements”. See “Ancillary Agreements”.
 
Regulatory Matters
 
The Closing of the Transaction is subject to consent from the competition law authorities in the Ukraine, Italy and Pakistan. The Closing of the Transaction is also subject to the approval of the Pakistan Telecommunications Authority. See “The Share Sale and Exchange Agreement — Conditions to Closing” and “Regulatory Matters”.
 
Risk Factors
 
In deciding whether to vote your shares in favor of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal, you should consider the risks described under “Risk Factors” and in Annex A and Annex B.


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THE SPECIAL GENERAL MEETING
 
This proxy statement is being provided to the VimpelCom shareholders and holders of VimpelCom ADSs in connection with the solicitation of proxies and voting instructions by VimpelCom’s Supervisory Board to be voted at the Special General Meeting.
 
Date, Time and Place
 
The Special General Meeting will be held on March 17, 2011 at 10 a.m. Central European Time at Claude Debussylaan 15, 1082 MC Amsterdam, The Netherlands. The Special General Meeting was convened by a notice issued by VimpelCom on January 17, 2011.
 
Purpose of the Special General Meeting
 
At the Special General Meeting, VimpelCom shareholders will be asked to consider and vote on the following proposals:
 
(1) to approve, for the purposes of bye-law 55.4(f) of the bye-laws of VimpelCom, the issuance by VimpelCom of up to 325,639,827 common shares of VimpelCom and of 305,000,000 convertible preferred shares of VimpelCom pursuant to the terms of the Share Sale and Exchange Agreement relating to the acquisition by VimpelCom of Wind Telecom approved by the Supervisory Board on January 16, 2011 (the “Share Issuance Proposal”); and
 
(2) to increase the authorized share capital of VimpelCom to US$3,114,171.83 by the creation of 630,639,827 new common shares of par value US$0.001 each in VimpelCom and of 305,000,000 new convertible preferred shares of par value US$0.001 each in VimpelCom, the new shares having the rights and being subject to the conditions set out in the VimpelCom bye laws (the “Authorized Share Capital Increase Proposal”).
 
The VimpelCom convertible preferred shares to be issued to Weather II and the Wind Telecom Shareholders may be converted into VimpelCom common shares any time between 2.5 years and 5 years after their issuance at a price based on the NYSE price for VimpelCom ADSs. Pursuant to VimpelCom’s bye-laws, VimpelCom must reserve and keep available out of its authorized but unissued common shares not less than the number of common shares issuable on conversion of its convertible preferred shares outstanding. Accordingly, the Authorized Share Capital Increase Proposal contemplates the creation of not only the shares to be issued pursuant to the Share Issuance Proposal, but also an additional 305,000,000 common shares issuable on conversion of the convertible preferred shares being issued.
 
AFTER CAREFUL CONSIDERATION OF THE TRANSACTION, THE VIMPELCOM SUPERVISORY BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF THE SHARE ISSUANCE PROPOSAL AND THE AUTHORIZED SHARE CAPITAL INCREASE PROPOSAL.
 
Record Date and Shares Entitled to Vote
 
Registered holders of record of VimpelCom shares will be entitled to vote at the Special General Meeting or any adjournment or postponement thereof. You are the registered holder of record of VimpelCom shares if your VimpelCom shares are registered in your name on VimpelCom’s Register of Members at the close of business on the Record Date. Holders of record of VimpelCom shares will receive a proxy card from VimpelCom and will be entitled to vote by mail or at the Special General Meeting.
 
Holders of record of VimpelCom ADSs will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the VimpelCom common shares represented by such holder’s VimpelCom ADSs. You are a holder of record of VimpelCom ADSs if your VimpelCom ADSs are evidenced by physical certificated American Depositary Receipts or book entries in your name so that you appear as a VimpelCom ADS holder in the register maintained by the Depositary at the close of business on the Record Date. If you are a holder of record of VimpelCom ADSs, you will receive a voting card from the Depositary with instructions on how to instruct the Depositary to vote the VimpelCom common shares represented by your VimpelCom ADSs.


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If you hold VimpelCom ADSs through a bank, broker or other nominee (in “street name”), you may receive from that institution a voting instruction form that you may use to instruct them on how to cause your VimpelCom ADSs to be voted.
 
Registered holders of VimpelCom shares can vote at the Special General Meeting by ballot. If you are a VimpelCom ADS holder, you may not vote your shares in person at the Special General Meeting unless you obtain a “legal proxy” giving you the right to vote the shares at the Special General Meeting. Even if you plan to attend the Special General Meeting, we recommend that you also submit your proxy form, voting card or voting instructions as described in the proxy statement so that your vote will be counted if you later decide not to attend the meeting.
 
A quorum for the transaction of business at the Special General Meeting is the presence in person of two or more persons at the start of the meeting having the right to attend and vote at the meeting and holding or representing in person or by proxy at least 50% plus one voting share of the total issued voting shares in VimpelCom at the time.
 
Pursuant to the VimpelCom bye-laws, the approval of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal are each subject to the affirmative vote of a simple majority of the votes cast.
 
In the event a quorum is not present at the Special General Meeting, then the Special General Meeting will stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the CEO may determine.
 
Abstentions will be counted toward the presence of a quorum at, but will not be considered votes cast on any proposal brought before, the Special General Meeting.
 
If you are a registered holder of VimpelCom shares, you may change your vote by signing, dating and returning a completed proxy form with a later date on or before the voting deadline of March 16, 2011 at 10:00 a.m. Central European Time or by attending the Special General Meeting and voting in person. If you are a VimpelCom ADS holder, you may change your vote at any time before the voting deadline of 5:00 p.m. New York Time on March 11, 2011. If you hold your VimpelCom ADSs in street name and wish to change your vote, you should follow the instructions provided by your bank, broker or other nominee. Registered holders of VimpelCom shares or VimpelCom ADSs who need another copy of their voting card or proxy form may contact D. F. King & Co., Inc. by any of the following methods:
 
Mail
 
48 Wall Street, 22nd Floor
New York, NY 10005
 
1 Ropemaker Street, 34th Floor
London, EC2Y 9HT
 
Email
 
vimpelcom@dfking.com
 
Phone
 
+1 800 431 9645 (toll-free from North America)
00 800 5464 5464 (toll-free from Continental Europe)
+1 212 269 5550 (banks and brokers call collect)
+44 207 920 9700 (from other locations)


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THE TRANSACTION
 
General Background and Description
 
On October 4, 2010, following the unanimous approval of VimpelCom’s Supervisory Board, VimpelCom entered into an agreement (the “Original Agreement”) with Wind Telecom and Weather II pursuant to which VimpelCom would acquire the shares of Wind Telecom held by Weather II and the shares of any minority investors in Wind Telecom that become party to the Original Agreement in exchange for consideration consisting of 325,639,827 newly issued VimpelCom common shares, US$1.8 billion in cash and the spin-off of certain assets. The Original Agreement remained subject, among other things, to final board approval of certain ancillary agreements, including an amended shareholders agreement among Altimo, Telenor and VimpelCom, with Weather II joining as a party. It was intended that the amended shareholders agreement would provide for Weather II to nominate two members to an enlarged VimpelCom Supervisory Board of eleven members, while Telenor and Altimo would each continue to nominate three members, and with three members continuing to be unaffiliated with any major shareholder.
 
Following the October 4, 2010 Supervisory Board meeting, VimpelCom, Weather II, Wind Telecom, Telenor and Altimo continued the negotiation of the relevant ancillary agreements in an effort to bring them to the Supervisory Board for final approval at a scheduled December 20, 2010 board meeting.
 
On December 19, 2010, Telenor delivered a letter to VimpelCom’s Chairman of the Supervisory Board stating, among other things, that, in its capacity as a shareholder of VimpelCom, Telenor did not support the proposed transaction with Weather II and Wind Telecom. On the morning of December 20, 2010, Telenor publicly announced its position.
 
On December 20, 2010, with a vote of six of its nine directors, the Supervisory Board approved the combination of VimpelCom and Wind Telecom as contemplated by the Original Agreement, including the non-shareholder related ancillary agreements which had been negotiated following the October 4, 2010 Supervisory Board meeting. The three members of the Supervisory Board who were nominated by Telenor voted against the combination, including the ancillary agreements. At the December 20, 2010 meeting, the Supervisory Board did not take a decision on the shareholder related agreements, including the amended shareholders agreement, due to Telenor’s publicly stated position that, in its capacity as a shareholder of VimpelCom, it did not support the transaction on the terms proposed. See “Risk Factors — Risk Factors Relating to the Transaction — Telenor opposes the Transaction and has challenged it”.
 
In connection with its December 20, 2010 approval, VimpelCom’s Supervisory Board authorized VimpelCom’s CEO to review and take into account the rights and obligations of the parties under the current VimpelCom Shareholders Agreement and bye-laws, and to negotiate further with Wind Telecom and Weather II the terms and conditions under which they would be willing to enter into a revised transaction, taking into account that the shareholder related agreements with Telenor were unlikely to be signed and delivered. The Supervisory Board further instructed VimpelCom’s CEO to bring such revised terms, if any, back to it for consideration and approval.
 
On January 16, 2011, VimpelCom’s Supervisory Board considered the revised terms and conditions, which had been negotiated following the December 20, 2010 Supervisory Board approval. With a vote of six of its nine directors — the three directors nominated by Telenor voting against — the Supervisory Board approved the Transaction. The revised terms and conditions were embodied in the Share Sale and Exchange Agreement, which the parties entered into on January 17, 2011. See “The Share Sale and Exchange Agreement”.
 
Subject to the approval of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal and the satisfaction or waiver of the other conditions specified in the Share Sale and Exchange Agreement, at Closing VimpelCom will acquire up to 100% of the share capital of Wind Telecom. Under the Share Sale and Exchange Agreement, VimpelCom is not required to close unless it will acquire at Closing shares representing at least 98.04% of Wind Telecom’s share capital (excluding shares held by Wind Telecom’s subsidiary, WAHF), which as of October 4, 2010, the date of the Original Agreement, were held by Weather II and certain private equity investors. VimpelCom will acquire these shares in exchange for consideration consisting of (i) up to 325,639,827 newly issued VimpelCom common shares, (ii) 305,000,000 newly issued convertible preferred shares and (iii) up to US$1.495 billion in cash. No amended shareholders agreement will be entered into and, as a consequence, it


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is expected that the composition of VimpelCom’s Supervisory Board will not change upon the Closing of the Transaction. See “The Share Sale and Exchange Agreement — The Transaction Consideration”.
 
At or after Closing, Wind Telecom’s interests in certain assets, which principally comprise OTH’s investments in Egypt and North Korea and certain non-core Wind Italy assets, will be transferred to Weather II, or if such transfers cannot be effected, VimpelCom will make certain cash payments to Weather II as described in “The Spin-Off Plan”.
 
The Wind Hellas Group, which includes Wind Telecom’s Greek operating subsidiary, is excluded from the Transaction.
 
VimpelCom’s Reasons for the Transaction; Recommendation of VimpelCom’s Supervisory Board
 
In reaching its decision to approve the Share Sale and Exchange Agreement on January 16, 2011, and to recommend that shareholders of VimpelCom vote in favor of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal, VimpelCom’s Supervisory Board considered a number of factors, including the ones discussed in the following paragraphs, among others. In light of the number and wide variety of factors considered in connection with its evaluation of the Transaction, the Supervisory Board did not consider it practicable to, and did not attempt to, quantify, rank or otherwise assign relative weights to the specific factors it considered in reaching its determination. Rather, the Supervisory Board made its recommendation based on the totality of information presented to, and the investigation conducted by or at the direction of, the Supervisory Board. In addition, individual directors may have given different weight to different factors. This explanation of VimpelCom’s reasons for the Transaction and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Statement Concerning Forward-Looking Statements”.
 
In evaluating the Share Sale and Exchange Agreement, VimpelCom’s Supervisory Board consulted with VimpelCom’s management and its legal and financial advisors, and, in reaching its decision to approve the Share Sale and Exchange Agreement and recommend that the shareholders of VimpelCom vote in favor of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal, the Supervisory Board considered a number of factors, which it viewed as generally supporting its determination, including, among others:
 
  •  the opportunity for VimpelCom to secure the advantages of scale and scope in a rapidly evolving and consolidating industry, by becoming a top-tier global telecoms company with a global footprint and a broad product range;
 
  •  the opportunity to position the company to take maximum advantage of the anticipated paradigm shift in the telecoms industry from voice to data;
 
  •  the opportunity to drive profitable growth by developing a balanced portfolio of high-quality assets with a broad presence in both mature and emerging and developing markets and by leveraging Wind Telecom’s experience in highly-developed data markets such as Italy and in low-cost under-penetrated mobile markets such as Pakistan and Bangladesh;
 
  •  the opportunity to acquire these assets on attractive financial terms which would allow the company to optimize its capital structure, minimize dilution for its shareholders and retain its dividend policy;
 
  •  the complementary nature of VimpelCom’s and Wind Telecom’s businesses and potential cost saving and other synergy opportunities, as well as the related potential positive impact on the combined company’s financial results and prospects;
 
  •  its knowledge of VimpelCom’s business, operations, financial condition, earnings and prospects and of its industry, as well as its understanding of Wind Telecom’s business, operations, financial condition, earnings and prospects, taking into account the results of its due diligence review of Wind Telecom;
 
  •  its knowledge of the current environment in the mobile telecommunications industry generally, including economic conditions, competitive pressures, and the impact of these factors on VimpelCom’s potential growth, development and strategic options;


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  •  the risks posed by the Algerian Government’s tax claims against Orascom Telecom Algeria (“OTA”) and the possibility that it may unilaterally purchase OTA, and the allocation of such risks in the Algerian Value Sharing Agreement (see “The Transaction — Algerian Value Sharing Arrangement”);
 
  •  the risks associated with the fact that Wind Telecom is highly leveraged and has significant debt servicing obligations, and the likelihood of the refinancing arrangements set out in the Share Sale and Exchange Agreement and the Refinancing Plan to help mitigate these risks and provide a more attractive debt profile for the combined company (See “The Refinancing Plan”);
 
  •  the risks associated with the outstanding tax claims from the Italian taxing authority and provisions in the Share Sale and Exchange Agreement that allocate liability for such claims among the parties (see “The Share Sale and Exchange Agreement — Indemnification”); and
 
  •  the regulatory and other approvals required in connection with the Transaction and the likelihood that such approvals would be received in a timely manner and without unacceptable conditions (see “Risk Factors — Risk Factors Relating to the Transaction — The Transaction is subject to satisfaction or waiver of several conditions.”).
 
In connection with the Transaction, VimpelCom engaged UBS and Deutsche Bank to act as its financial advisors. Additionally, Citi acted as financial advisor to the Supervisory Board of VimpelCom.
 
On the basis of the above and other factors, VimpelCom’s Supervisory Board recommends that VimpelCom shareholders vote “FOR” the Share Issuance Proposal and the Authorized Share Capital Increase Proposal.
 
Algerian Value Sharing Arrangement
 
Notwithstanding the Algerian Government’s ongoing measures against OTA, OTA remains a strategically important asset for VimpelCom. VimpelCom is therefore interested in exploring with the Algerian Government a resolution which would allow VimpelCom to retain OTA following completion of the Transaction.
 
In the event that such a resolution is not possible within a reasonable time frame, VimpelCom has sought to lessen its financial exposure to the situation surrounding OTA. Toward that end, upon Closing of the Transaction, VimpelCom and Weather II will enter into the Algerian Value Sharing Agreement. The Algerian Value Sharing Agreement gives VimpelCom the option, which can be exercised by VimpelCom at any time within six months following the Closing of the Transaction, to choose to apply the value sharing arrangement contained therein with Weather II with respect to OTH’s shareholding in OTA.
 
This value sharing arrangement would involve cash payments from one party to the other based on certain formulae linked to an agreed implied equity value of VimpelCom’s see through ownership of OTA (Wind Telecom owns 51.7% of OTH which in turn owns 96.8% of OTA) (the “Agreed OTA Equity Value”) under various scenarios. In particular, the arrangement provides for financial losses or gains, with reference to the Agreed OTA Equity Value, arising from the sale of all or part of OTA to the Algerian Government or from the eventual settlement of the disputes between OTA and the Algerian Government to be shared in certain proportions between VimpelCom and Weather II. Weather II would be responsible for the substantial majority of the financial loss below the Agreed OTA Equity Value and would receive the substantial majority of the financial gain above the Agreed OTA Equity Value.
 
Interests of Certain Persons in the Transaction
 
Pursuant to a Share Sale and Purchase Agreement dated January 4, 2010 as amended, our Chief Executive Officer, Alexander Izosimov, is entitled to beneficially receive up to 600,000 common shares in VimpelCom as a result of the Closing of the Transaction.
 
On January 10, 2011, Altimo informed us that an affiliate of Altimo owns an indirect equity interest with a market value as of January 7, 2010 of approximately US$27.7 million in OTH. See “Risk Factors — Risk Factors Relating to the Transaction — Telenor opposes the Transaction and has challenged it”.


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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
The following unaudited pro forma condensed combined financial information of VimpelCom is being provided to give a better understanding of what VimpelCom’s results of operations and financial position might have looked like had the pro forma adjustment transactions occurred on an earlier date. The unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined income statements (“Unaudited Pro Forma Condensed Combined Financial Information”) of VimpelCom are presented for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had these acquisitions been completed at the beginning of the period presented, nor is it indicative of the results of operations in future periods or the future financial position of the combined businesses. The pro forma adjustments are based upon available information and certain assumptions that VimpelCom believes to be reasonable. These adjustments could materially change as both the determination of purchase price and the allocation of the purchase price for Wind Telecom has not been finalized. Accordingly, there can be no assurance that the final allocation of purchase price will not differ from the preliminary allocation reflected in the Unaudited Pro Forma Condensed Combined Financial Information.
 
The Unaudited Pro Forma Condensed Combined Financial Information gives effect to the following transactions as if they occurred on January 1, 2009 for the pro forma condensed combined statements of income and as if they occurred on September 30, 2010 for the pro forma condensed combined balance sheet:
 
  •  Acquisition by VimpelCom of Wind Telecom, including 100% of Wind Italy and 51.7% of OTH adjusted for certain assets and liabilities not acquired; and
 
  •  Financing the acquisition of Wind Telecom, along with the refinancing of certain pre-existing debt due to requirements included in the Share Sale and Exchange Agreement.
 
Further to the above, the Unaudited Pro Forma Condensed Combined Financial Information reflects the following adjustments:
 
  •  Acquisition by VimpelCom, accounting successor of OJSC VimpelCom, of Kyivstar CJSC (“Kyivstar”), as if it occurred on January 1, 2009. The VimpelCom balance sheet and income statement reflect this acquisition from April 21, 2010;
 
  •  Consolidation of Sky Mobile for the year ending December 31, 2009, which was already reflected in the VimpelCom balance sheet and income statement since January 1, 2010.
 
On April 21, 2010, following the successful completion of VimpelCom’s exchange offer for common and American depositary shares of OJSC VimpelCom, VimpelCom’s two strategic shareholders completed the acquisition of Kyivstar by VimpelCom. This transaction was accounted for under the acquisition method of accounting in accordance with ASC 805, Business Combinations (“ASC 805”). Therefore, the financial results of Kyivstar have been included in the consolidated financial results of the Company since April 21, 2010. The financial results for the periods prior to April 21, 2010 represent the historical financial results of OJSC VimpelCom.
 
Effective January 1, 2010, OJSC VimpelCom consolidated Sky Mobile under the revised provisions of ASC 810, Consolidation. Accordingly, the impact of consolidating this entity has been reflected in the Unaudited Pro Forma Condensed Combined Financial Information as if Sky Mobile was consolidated effective January 1, 2009.
 
At the Closing of the Transaction, VimpelCom will own, through Wind Telecom, 51.7% of OTH and 100% of Wind Italy. Under the terms of the Share Sale and Exchange Agreement, Wind Telecom Shareholders will contribute to VimpelCom their shares in Wind Telecom in exchange for a consideration consisting of up to 325,639,827 newly issued VimpelCom common shares, 305,000,000 convertible preferred shares, up to US$1.495 billion in cash and certain assets that will be demerged from OTH and from Wind Italy. The Wind Telecom interests in these assets, which principally comprise OTH’s investments in Egypt and North Korea and certain non-core Wind Italy assets including WIS, will be transferred to Weather II. The convertible preferred shares do not have rights to dividends, but do have voting rights. Each convertible preferred share may be converted into a common share any time between 2.5 years and 5 years after its issuance at a price based on the NYSE price for VimpelCom ADSs. The Wind Hellas Group is entirely excluded from the Transaction and the Unaudited Pro Forma


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Condensed Combined Financial Information. Orascom Telecom Tunisia, which was recently sold by Wind Telecom, is treated as an asset held for sale in the unaudited pro forma combined balance sheet and excluded from the unaudited pro forma combined income statement. The Transaction will be accounted for using the purchase method of accounting in accordance with ASC 805, accordingly, the assets acquired and liabilities assumed will be recorded at their fair values as of the Closing date of the Transaction.
 
VimpelCom will finance the cash portion of the purchase consideration through debt arrangements to be entered into. Further, per the terms of the Share Sale and Exchange Agreement, VimpelCom is required to refinance certain pre-existing debt of Wind Telecom, due to change in control provisions triggered by Transaction. See “The Refinancing Plan”.
 
The pro forma adjustments to the Unaudited Pro Forma Condensed Combined Financial Information are limited to those that are (1) directly attributable to the pro forma adjustment transactions, (2) factually supportable, and (3) with respect to the statements of income, expected to have a continuing impact on the combined results. The Unaudited Pro Forma Condensed Combined Financial Information does not reflect, for example:
 
  •  any integration costs that may be incurred as a result of the implementation of VimpelCom’s strategy;
 
  •  any synergies, operating efficiencies and cost savings that may result from implementation of VimpelCom’s strategy;
 
  •  any benefits that may be derived from VimpelCom’s growth prospects; or
 
  •  changes in rates for services or exchange rates subsequent to the dates of the Unaudited Pro Forma Condensed Combined Financial Information.
 
VimpelCom has not commenced or implemented any integration initiatives or actions with respect to Wind Telecom. Accordingly, additional liabilities may be incurred in connection with the implementation of VimpelCom’s strategy for the combined companies or the completion of the Transaction.
 
The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with the notes thereto as well as the historical annual consolidated financial statements of VimpelCom and Wind Telecom. For historical annual consolidated financial statements of VimpelCom, see “Where You Can Find More Information”. The historical annual consolidated financial statements of Wind Telecom are included in F-pages to this proxy statement.
 
The Unaudited Pro Forma Condensed Combined Financial Information is prepared in accordance with U.S. GAAP and is presented in U.S. dollars and has been derived from the OJSC VimpelCom financial statements, prepared in accordance with U.S. GAAP and the Kyivstar financial statements, prepared in accordance with International Financial Reporting Standards, as issued by the IASB (“IFRS”), and presented in Ukrainian hryvnia. The historical Kyivstar amounts reflected in the Unaudited Pro Forma Condensed Combined Financial Information have been derived from the Kyivstar financial statements prepared under IFRS, and reconciled to U.S. GAAP, as further discussed below in Note 2 to the Unaudited Pro Forma Condensed Combined Financial Information. The historical Wind Telecom combined financial statements reflected in the Unaudited Pro Forma Condensed Combined Financial Information have been derived from the Wind Telecom combined financial statements prepared under IFRS, and reconciled to U.S. GAAP, as further discussed below in Note 2 to the Unaudited Pro Forma Condensed Combined Financial Information.


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VIMPELCOM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2010
(in millions of U.S. Dollars, unless otherwise noted)
 
                                                         
    U.S. GAAP Historical     Pro Forma adjustments     Pro Forma
 
                Wind Telecom’s
    Acquisition of
                Combined
 
    Vimpelcom
    Wind Telecom
    Sale of
    Wind
    Financing
    Other
    VimpelCom
 
    Ltd     Combined     Tunisia     Telecom     Adjustments     Adjustments     Ltd.  
    (Note 2a)     (Note 2b)     (Note 3)     (Note 4)     (Note 5)     (Note 6)        
(In millions of U.S. dollars)  
 
Assets
                                                       
Current Assets:
                                                       
Cash and cash equivalents
  US$ 2,467     US$ 1,235     US$ 542  a   US$ (1,495 )a   US$ 1,795  a   US$     US$ 4,544  
Trade accounts receivable, net of allowance for doubtful accounts
    526       1,873                               2,399  
Inventory
    84       71                               155  
Deferred income taxes
    99                   190  b                 289  
Input value added tax
    144       165                               309  
Due from related parties
    113                                     113  
Other current assets
    349       1,134                               1,483  
                                                         
Total current assets
    3,782       4,478       542       (1,305 )     1,795             9,292  
Property and equipment, net
    6,480       7,891             (639 )c                 13,732  
Goodwill
    6,943       5,181             3,125  e                 15,249  
Other intangible assets, net
    2,212       5,901             3,370  d                 11,483  
Software, net
    513       394              d                 907  
Investments in associates
    441                                     441  
Other assets
    675       2,667       (219 )b     (101 )f     356  b           3,378  
                                                         
Total assets
  US$ 21,046     US$ 26,512     US$ 323     US$ 4,450     US$ 2,151     US$     US$ 54,482  
                                                         
 
Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
                                                       
Accounts payable
  US$ 750     US$ 2,524     US$     US$     US$     US$     US$ 3,274  
Due to employees
    149       146                               295  
Due to related parties
    3       5                               8  
Accrued liabilities
    394       1,222       210  c     (53 )g                 1,773  
Taxes payable
    287       345                               632  
Customer advances, net of VAT
    327       429                               756  
Customer deposits
    28       35                               63  
Short-term debt
    2,126       1,128                               3,254  
                                                         
Total current liabilities
    4,064       5,834       210       (53 )                 10,055  
Deferred income taxes
    787       1,242             885  b                 2,914  
Long-term debt
    4,367       17,189       (658 ) d           2,151  c           23,048  
Other non-current liabilities
    171       773             867  h                 1,811  
Commitments, contingencies and uncertainties
                                         
                                                         
Total liabilities
    9,389       25,038       (448 )     1,699       2,151             37,828  
Redeemable noncontrolling interest
    519       1,867             (1,867 )i                 519  
Equity
    10,862       (783 )     771       3,303  j                 14,153  
Noncontrolling interest
    276       390             1,315  j                 1,981  
                                                         
Total equity
    11,138       (393 )     771       4,618  j                 16,134  
                                                         
Total liabilities, redeemable noncontrolling interest and equity
  US$ 21,046     US$ 26,512     US$ 323     US$ 4,450     US$ 2,151     US$     US$ 54,482  
                                                         
 
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.


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VIMPELCOM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the Nine Months Ended September 30, 2010
(In millions of U.S. Dollars, unless otherwise noted)
 
                                                                         
                Pro Forma
          U.S. GAAP
                         
    U.S. GAAP Historical     Adjustments     Pro Forma
    Historical     Pro Forma Adjustments        
    VimpelCom
                Combined
                               
    OJSC
    Kyivstar
          VimpelCom
                            Pro Forma
 
    (VimpelCom
    CJSC
          Ltd. before
    Wind
                      Combined
 
    Ltd. Since
    (from Jan 1 — 
    Acquisition of
    Wind Telecom
    Telecom
    Acquisition of
    Financing
    Other
    VimpelCom
 
    April 21, 2010)     April 20, 2010)     Kyivstar     Acquisition     Combined     Wind Telecom     Adjustments     Adjustments     Ltd.  
    (Note 2c)     (Note 2d)     (Note 7)           (Note 2e)     (Note 8)     (Note 9)     (Note 10)        
(In millions of U.S. dollars, except per share data)  
 
Operating revenues:
                                                                       
Service revenues
  US$ 7,568     US$ 398     US$ (30 ) a,b   US$ 7,937     US$ 7,960     US$ (14 ) a   US$     US$  —     US$ 15,883  
Sales of equipment and accessories
    106       2             108                               108  
Other revenues
    22       8             31             (1 ) a                 30  
                                                                         
Total operating revenues
    7,697       408       (30 )     8,075       7,960       (16 )                 16,021  
Revenue based tax
                                                     
                                                                         
Net operating revenues
    7,697       408       (30 )     8,075       7,960       (16 )                 16,020  
Operating expenses:
                                                                       
Service costs
    1,649       67       (23 ) b     1,693       1,694                         3,387  
Cost of equipment and accessories
    119       6             125       307                         431  
Selling, general and administrative expenses
    2,209       115             2,324       2,846                         5,170  
Depreciation
    1,137       54       14  c     1,205       1,066       (135 ) b                 2,136  
Amortization
    321       28       50  c     399       330       429  c                 1,158  
Impairment loss
          1             1       23                         24  
Provision for doubtful accounts
    40       2             42       77                         119  
                                                                         
Total operating expenses
    5,475       273       40       5,788       6,343       293                   12,425  
                                                                         
Operating income
    2,222       135       (70 )     2,287       1,617       (309 )                 3,595  
Other income and expenses:
                                                                       
Interest income
    42       4       (6 )     41       75                         115  
Net foreign exchange (loss)/gain
    6       (5 )           1       (77 )                       (76 )
Interest expense
    (399 )     (0 )     6       (394 )     (1,204 )     135  d     (93 ) a           (1,556 )
Equity in net (loss)/gain of associates
    27                   27       (101 )                       (74 )
Other (expenses)/income, net
    (85 )     (4 )           (88 )     (218 )                       (307 )
                                                                         
Total other income and expenses
    (410 )     (4 )           (414 )     (1,525 )     135       (93 )           (1,898 )
                                                                         
Income before income taxes
    1,812       132       (70 )     1,873       92       (173 )     (93 )           1,698  
                                                                       
Income tax expense
    561       35       (18 ) a,c     578       247       (54 ) e     (23 ) b           749  
                                                                         
Net income
    1,251       97       (53 )     1,294       (156 )     (120 )     (70 )           948  
Net (loss)/income attributable to the noncontrolling interest
    39                   39       (15 )     (1 )     (52 )           (29 )
                                                                         
Net income attributable to Vimpelcom
  US$ 1,212     US$ 97     US$ (53 )   US$ 1,256     US$ (141 )   US$ (118 )   US$ (18 )   US$     US$ 979  
                                                                         
Basic EPS:
                                                                       
Pro forma net income attributable to VimpelCom per common share
                          US$ 1.07                                     US$ 0.65  
Weighted average common shares outstanding (thousand) as of September 30, 2010
                            1,178,629               325,640                       1,504,269  
Diluted EPS:
                                                                       
Pro forma net income attributable to VimpelCom per common share
                          US$ 1.06                                     US$ 0.65  
Weighted average diluted shares outstanding (thousand) as of September 30, 2010
                            1,179,141               325,640                       1,504,781  
 
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.


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VIMPELCOM LTD.

UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
For the Year Ended December 31, 2009
(in millions of U.S. Dollars, unless otherwise noted)
 
                                                                                 
                            Pro Forma
                               
                            Combined
    U.S. GAAP
                         
    U.S. GAAP Historical     Pro Forma Adjustments     VimpelCom Ltd.
    Historical     Pro Forma Adjustments     Pro Forma
 
                            before Wind
    Wind
    Acquisition
                Combined
 
    VimpelCom
    Kyivstar
    Consolidation
    Acquisition of
    Telecom
    Telecom
    of Wind
    Financing
    Other
    VimpelCom
 
    OJSC     CJSC     of Sky Mobile     Kyivstar     Acquisition     Combined     Telecom     Adjustments     Adjustments     Ltd.  
    (Note 2f)     (Note 2g)     (Note 2h)     (Note 7)           (Note 2i)     (Note 8)     (Note 9)     (Note 10)        
(In millions of U.S. dollars, except per share data)  
 
Operating revenues:
                                                                               
Service revenues
  US$ 8,581     US$ 1,461     US$ 106     US$ (121 ) a,b   US$ 10,026     US$ 11,109     US$ (9 ) a   US$     US$ (4 )   US$ 21,123  
Sales of equipment and accessories
    110       5                   115                               115  
Other revenues
    20       23                   43              a                 43  
                                                                                 
Total operating revenues
    8,711       1,489       106       (121 )     10,185       11,109       (9 )           (4 )     21,282  
                                                                                 
Revenue based tax
    (8 )                       (8 )                             (8 )
                                                                                 
Net operating revenues
    8,703       1,489       106       (121 )     10,177       11,109       (9 )           (4 )     21,274  
Operating expenses:
                                                                               
Service costs
    1,878       247       24       (87 ) b     2,063       2,304                   (4 )     4,363  
Cost of equipment and accessories
    111       20                   130       556                         687  
Selling, general and administrative expenses
    2,390       382       18             2,790       3,909                         6,699  
Depreciation
    1,393       172       14       56  c     1,635       1,536       (204 ) b                 2,966  
Amortization
    301       53       3       205  c     562       466       627  c                 1,656  
Impairment loss
          34                   34       36                         70  
Provision for doubtful accounts
    51       3                   54       114                         168  
                                                                                 
Total operating expenses
    6,125       911       59       174       7,269       8,921       423             (4 )     16,610  
                                                                                 
                                                                               
Operating income
    2,578       578       47       (295 )     2,908       2,188       (432 )                 4,664  
                                                                                 
Other income and expenses:
                                                                               
Interest income
    52       69                   120       235                         356  
Net foreign exchange (loss)/gain
    (411 )     (6 )     2             (415 )     26                         (388 )
Interest expense
    (599 )     (5 )                 (604 )     (1,632 )     178  d     (124 ) a           (2,182 )
Equity in net (loss)/gain of associates
    (36 )                       (36 )     (47 )                       (83 )
Other (expenses)/income, net
    (32 )     (17 )                 (49 )     (391 )                       (440 )
                                                                                 
Total other income and expenses
    (1,026 )     41       2             (983 )     (1,808 )     178       (124 )           (2,737 )
                                                                                 
                                                                               
Income before income taxes
    1,552       619       49       (295 )     1,925       380       (254 )     (124 )           1,927  
Income tax expense
    435       155       5       (74 ) a,c     521       569       (77 ) e     (39 ) b           974  
                                                                                 
Net income
    1,117       464       44       (221 )     1,404       (189 )     (177 )     (85 )           953  
                                                                               
Net (loss)/income attributable to the noncontrolling interest
    (4 )           44             40       92       1       (47 )           85  
                                                                                 
Net income attributable to Vimpelcom
  US$ 1,122     US$ 464     US$     US$ (221 )   US$ 1,364     US$ (281 )   US$ (178 )   US$ (38 )   US$     US$ 867  
                                                                                 
Basic EPS:
                                                                               
Pro forma net income attributable to VimpelCom per common share
                                  US$ 1.16                                     US$ 0.58  
Weighted average common shares outstanding (thousand) as of September 30, 2010
                                    1,178,629               325,640                       1,504,269  
Diluted EPS:
                                                                               
Pro forma net income attributable to VimpelCom per common share
                                  US$ 1.16                                     US$ 0.58  
Weighted average diluted shares outstanding (thousand) as of September 30, 2010
                                    1,179,141               325,640                       1,504,781  
 
See accompanying notes to Unaudited Pro Forma Condensed Combined Financial Information.


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Note 1 — Basis of Pro Forma Presentation
 
The Unaudited Pro Forma Condensed Combined Income Statements for the nine months ended September 30, 2010 and for the year ended December 31, 2009, reflect adjustments as if the acquisitions of Kyivstar and Wind Telecom, each accounted for using the purchase method of accounting of ASC 805, had each occurred on January 1, 2009.
 
The Unaudited Pro Forma Condensed Combined Balance Sheet reflects adjustments as if the acquisition of Wind Telecom, accounted for using the purchase method of accounting, had occurred as of September 30, 2010.
 
On April 21, 2010, following the successful completion of VimpelCom’s exchange offer for common and American depositary shares of OJSC VimpelCom, VimpelCom’s two strategic shareholders completed the acquisition of Kyivstar by VimpelCom Ltd. This transaction was accounted for under the acquisition method of accounting in accordance with ASC 805 as the acquisition of Kyivstar by VimpelCom, an accounting successor of OJSC VimpelCom. Therefore, the financial results of Kyivstar have been included in the consolidated financial results of the Company since April 21, 2010. The financial results for the periods prior to April 21, 2010 represent the historical financial results of OJSC VimpelCom.
 
At the Closing of the Transaction, VimpelCom will own, through Wind Telecom, 51.7% of OTH and 100% of Wind Italy. Under the terms of the Share Sale and Exchange Agreement, Wind Telecom Shareholders will contribute to VimpelCom their shares in Wind Telecom in exchange for a consideration consisting of up to 325,639,827 newly issued VimpelCom common shares, 305,000,000 convertible preferred shares, up to US$1.495 billion in cash and certain assets that will be demerged from OTH and from Wind Italy. The Wind Telecom interests in these assets, which principally comprise OTH’s investments in Egypt and North Korea and certain non-core Wind Italy assets, including WIS, will be transferred to Weather II. The convertible preferred shares do not have rights to dividends, but do have voting rights. Each convertible preferred share may be converted into a common any time between 2.5 years and 5 years after its issuance at a price based on the NYSE price for VimpelCom ADSs. The Wind Hellas Group is entirely excluded from the Transaction and the Unaudited Pro Forma Condensed Combined Financial Information. Orascom Telecom Tunisia, which was recently sold by Wind Telecom, is treated as an asset held for sale in the unaudited pro forma combined balance sheet and excluded from the unaudited pro forma combined income statement. The Transaction will be accounted for using the purchase method of accounting in accordance with ASC 805, accordingly, the assets acquired and liabilities assumed will be recorded at their fair values as of the Closing date of the Transaction.
 
In terms of the earnings per share impact of the share issuances, the 325,639,827 common shares have been included in the basic and diluted pro forma earnings per share calculations. The impact of the 305,000,000 convertible preferred shares has been considered in the diluted earnings per share calculation under the Treasury Stock Method. Due to the fact that the exercise price exceeded VimpelCom’s weighted average share price for the nine month period ended September 31, 2010, the impact of the convertible preferred shares was anti-dilutive and therefore excluded from the diluted pro forma earnings per share calculation.
 
Intercompany sales between the entities included in the Unaudited Pro Forma Condensed Combined Financial Information have been excluded from the Unaudited Pro Forma Condensed Combined Financial Information.
 
No amounts have been included in the preliminary pro forma purchase price allocation for estimated costs to be incurred to achieve savings or other benefits of the Transaction. Similarly, the Unaudited Pro Forma Condensed Combined Financial Information does not reflect any cost savings or other benefits that may be obtained through synergies among the operations of VimpelCom, Kyivstar and Wind Telecom.
 
The Unaudited Pro Forma Condensed Combined Financial Information is not necessarily indicative of the historical results that would have occurred had the transactions taken place as of the dates indicated. Likewise, the pro forma combined provision for income taxes and the pro forma combined balances of deferred taxes may not represent the amounts that would have resulted had the entities filed consolidated income tax returns during the periods presented. In addition, they do not reflect cost savings or other synergies resulting from the acquisitions that may be realized in future periods.


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The Unaudited Pro Forma Condensed Combined Financial Information has been prepared on the basis of assumptions described in these notes. VimpelCom has not completed its purchase price allocation for its acquisition of Wind Telecom, and the actual allocation may materially differ from the preliminary allocation. The receipt of the final valuation and the impact of ongoing integration activities could cause material differences between actual and pro forma results in the information presented. As VimpelCom completes the purchase price allocation for Wind Telecom, the preliminary allocation is subject to change.
 
Note 2 — Historical Financial Statements
 
Represents the historical financial statements of VimpelCom, as an accounting successor to OJSC VimpelCom, Kyivstar, and Wind Telecom in accordance with U.S. GAAP.
 
  (a)  Represents the historical unaudited condensed consolidated balance sheet of VimpelCom as of September 30, 2010. This unaudited condensed consolidated balance sheet includes the estimated fair value of the assets acquired and liabilities assumed of Kyivstar, which was acquired on April 21, 2010.
 
  (b)  Represents the historical unaudited condensed combined balance sheet of Wind Telecom as of September 30, 2010. The historical unaudited condensed combined financial statements of Wind Telecom are prepared in accordance with IFRS, and presented in Euros. For the purpose of the Unaudited Pro Forma Condensed Combined Financial Information, Wind Telecom’s unaudited combined financial statements have been reconciled to U.S. GAAP and a U.S. dollar presentation. This reconciliation has not been audited. The differences between Wind Telecom’s historical financial statements and the Wind Telecom combined financial statements column in the Unaudited Pro Forma Condensed Combined Financial Information relate to:
 
  (1)  The change in reporting currency from the Euro to the U.S. dollar at an exchange of 1.36 U.S. dollars per Euro as of September 30, 2010;
 
  (2)  The carve out of all assets and liabilities not acquired relating to Wind Hellas Telecommunications S.A., the carve out of certain assets and liabilities which are not being acquired of Wind Italy and OTH, which are planned to be demerged or spun off at or after the Closing of the Transaction, and the classification of all assets and liabilities of Orascom Telecom Tunisia as held for sale, as it has been recently sold by OTH;
 
  (3)  Certain reclassifications to align the classification of assets and liabilities with U.S. GAAP requirements; and
 
  (4)  Differences between U.S. GAAP and IFRS including revenue recognition, impairments, classification of contingently redeemable shares, deferred revenue and intangible assets.
 
Refer to Note 13 for more details.
 
  (c)  Represents the historical unaudited condensed consolidated income statement of VimpelCom, accounting successor to OJSC VimpelCom, for the nine months ended September 30, 2010.
 
  (d)  Represents the historical unaudited condensed consolidated income statement of Kyivstar for the period January 1, 2010 to April 20, 2010. The historical financial statements of Kyivstar are prepared in accordance with IFRS, and presented in Ukrainian hryvnia. For the purpose of the Unaudited Pro Forma Condensed Combined Financial Information, Kyivstar’s financial statements have been reconciled to U.S. GAAP and a U.S. dollar presentation. This reconciliation has not been audited. The differences between Kyivstar’s historical financial statements and the Kyivstar column in the Unaudited Pro Forma Condensed Combined Financial Information relate to:
 
  (1)  The change in reporting currency from the Ukrainian Hryvnia to the U.S. dollar at an exchange of 7.92 for the period ended April 21, 2010;
 
  (2)  Certain reclassifications to align the classification of assets and liabilities with U.S. GAAP requirements; and


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  (3)  Differences between U.S. GAAP and IFRS associated with the reversal of impairment losses, the determination of discount rates used for pensions, the treatment of certain costs, and the tax effects of these adjustments.
 
  (e)  Represents the historical unaudited condensed combined income statement of Wind Telecom for the nine months ended September 30, 2010. The historical unaudited combined financial statements of Wind Telecom are prepared in accordance with IFRS, and presented in Euros. For the purpose of the Unaudited Pro Forma Condensed Combined Financial Information, Wind Telecom’s combined financial statements have been reconciled to U.S. GAAP and a U.S. dollar presentation. This reconciliation has not been audited. The differences between Wind Telecom’s historical financial statements and the Wind Telecom combined financial statement column in the Unaudited Pro Forma Condensed Combined Financial Information relate to:
 
  (1)  The change in reporting currency from the Euro to the U.S. dollar at an exchange of 1.29 U.S. dollars average per Euro for the nine months ended September 30, 2010;
 
  (2)  The carve out of all revenues and expenses relating to assets, liabilities, businesses not acquired including Wind Hellas Telecommunications S.A., the carve out of certain revenues and expenses which are not being acquired pertaining to the Wind Italy business, the carve out of the revenues and expenses associated with the OTH businesses which are expected to be demerged or spun off at or following the Closing of the Transaction, and the exclusion of revenues and expenses relating to assets, liabilities, businesses of the OTH Tunisia business, which has been recently sold by OTH;
 
  (3)  Certain reclassifications to align the classification of assets and liabilities with U.S. GAAP requirements; and
 
  (4)  Differences between U.S. GAAP and IFRS including revenue recognition, impairments, classification of contingently redeemable shares, and intangible assets.
 
Refer to Note 14 for more details.
 
  (f)  Represents the historical consolidated income statement of OJSC VimpelCom, predecessor to VimpelCom Ltd., for the year ended December 31, 2009.
 
  (g)  Represents the historical consolidated income statement of Kyivstar for the year ended December 31, 2009. The historical financial statements of Kyivstar are prepared in accordance with IFRS, and presented in Ukrainian Hryvnia. For the purpose of the Unaudited Pro Forma Condensed Combined Financial Information, Kyivstar’s financial statements have been reconciled to U.S. GAAP and a U.S. dollar presentation. This reconciliation has not been audited. The differences between Kyivstar’s historical financial statements and the Kyivstar column in the Unaudited Pro Forma Condensed Combined Financial Information relate to:
 
  (1)  The change in reporting currency from the Ukrainian hryvnia to the U.S. dollar at an exchange of 7.79 for the year ended December 31, 2009 and a rate of 7.98 as of December 31, 2009;
 
  (2)  Certain reclassifications to align the classification of assets and liabilities with U.S. GAAP requirements; and
 
  (3)  Differences between U.S. GAAP and IFRS associated with the reversal of impairment losses, the determination of discount rates used for pensions, the treatment of certain costs, the treatment of deferred revenues, and the tax effects of these adjustments.
 
  (h)  Represents the consolidation of Sky Mobile under the revised provisions of ASC 810, Consolidation. Sky Mobile was consolidated by OJSC VimpelCom effective January 1, 2010, the impact of consolidating this entity has been reflected in the Unaudited Pro Forma Condensed Combined Financial Information as if Sky Mobile was consolidated effective January 1, 2009.
 
  (i)  Represents the unaudited historical combined income statement of Wind Telecom for the year ended December 31, 2009. The historical unaudited financial statements of Wind Telecom are prepared in


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  accordance with IFRS, and presented in Euros. For the purpose of the Unaudited Pro Forma Condensed Combined Financial Information, Wind Telecom’s combined financial statements have been reconciled to U.S. GAAP and a U.S. dollar presentation. This reconciliation has not been audited. The differences between Wind Telecom’s historical financial statements and the Wind Telecom column in the Unaudited Pro Forma Condensed Combined Financial Information relate to:
 
  (1)  The change in reporting currency from the Euro to the U.S. dollar at an exchange of 1.39 U.S. dollars average per Euro for the year ended December 31, 2009;
 
  (2)  The carve out of all revenues and expenses relating to assets, liabilities, businesses not acquired including Wind Hellas Telecommunications S.A., the carve out of certain revenues and expenses which are not being acquired pertaining to the Wind Italy business, the carve out of the revenues and expenses associated with the OTH business which are expected to be demerged or spun off prior to or simultaneously with Transaction, and the exclusion of revenues and expenses relating to assets, liabilities, businesses not of the Orascom Telecom Tunisia business, which has been recently sold by OTH;
 
  (3)  Certain reclassifications to align the classification of assets and liabilities with U.S. GAAP requirements; and
 
  (4)  Differences between U.S. GAAP and IFRS including revenue recognition, impairments, classification of contingently redeemable shares, and intangible assets.
 
Refer to Note 15 for more details.
 
Note 3 — Wind Telecom’s sale of Tunisia (Balance Sheet)
 
In November 2010, OTH announced, after receiving consent from VimpelCom, that it had entered into a share purchase agreement with Qatar Telecom (“Qtel”) Q.S.C. by which OTH would sell its entire 50% shareholding in Orascom Telecom Tunisia. In January 2011, OTH announced that the sale was completed for US$1.2 billion. Orascom Telecom Tunisia was included in the U.S. GAAP historical Wind Telecom combined balance sheet as an asset held for sale for US$219 million, and excluded from the U.S. GAAP historical Wind Telecom combined income statement. The sale has generated a profit after tax for Wind Telecom of US$771 million.
 
  a)  Reflects the US$1.2 billion of cash received for the sale of Orascom Telecom Tunisia, less the cash used to pay down US$658 million of existing OTH debt.
 
  b)  Reflects the elimination of the Orascom Telecom Tunisia assets which were classified as “assets held for sale’’ in the historical combined balance sheet.
 
  c)  Reflects the accrued tax payable related to the sale of Orascom Telecom Tunisia.
 
  d)  Reflects the pay down of US$658 million of existing OTH debt from the US$1.2 billion of proceeds received from the sale of Orascom Telecom Tunisia.
 
  e)  Reflects the net equity impact of the sale of Orascom Telecom Tunisia, after considering the cash received, net of the adjustment for the pay down of existing debt, the recording of accrued taxes and the elimination of the “assets held for sale’’.
 
Note 4 — Preliminary purchase price allocation for Wind Telecom (Balance Sheet)
 
At the Closing of the Transaction, VimpelCom will own, through Wind Telecom, 51.7% of OTH and 100% of Wind Italy. Under the terms of the Share Sale and Exchange Agreement, Wind Telecom Shareholders will contribute to VimpelCom their shares in Wind Telecom in exchange for a consideration consisting of up to 325,639,827 newly issued VimpelCom common shares, 305,000,000 convertible preferred shares, up to US$1.495 billion in cash and certain assets that will be demerged from OTH and from Wind Italy. The Wind Telecom interests in these assets, which principally comprise OTH’s investments in Egypt and North Korea and certain non-core Wind Italy assets, including WIS, will be transferred to the current Wind Telecom shareholders. The convertible preferred shares do not have rights to dividends, but do have voting rights. Each convertible


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preferred share may be converted into a common share any time between 2.5 years and 5 years after its issuance at a price based on the NYSE price for VimpelCom ADSs. The Wind Healls Group is entirely excluded from the Transaction and the Unaudited Pro Forma Condensed Combined Financial Information. Orascom Telecom Tunisia, which was recently sold by Wind Telecom, is treated as an asset held for sale in the U.S. GAAP historical Wind Telecom combined balance sheet and excluded from the U.S. GAAP historical Wind Telecom combined income statement.
 
The Unaudited Pro Forma Condensed Combined Financial Information gives effect to the Wind Telecom acquisition using the acquisition method of accounting in accordance with ASC 805. For accounting purposes, VimpelCom is deemed to acquire Wind Telecom. In a transaction in which the consideration is not in the form of cash, the acquisition consideration (which is equivalent to the purchase price) is measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable. The acquisition method of accounting uses the fair value concepts defined in ASC 820, Fair Value Measurements and Disclosures. ASC 805 requires, among other things, that most assets acquired and liabilities assumed be recognized at their acquisition date fair values and that the fair value of intangibles are recognized regardless of their intended use.
 
In addition, ASC 805 establishes that the consideration transferred be measured at the closing date of the acquisition at the then-current market price. This particular requirement may result in the final consideration valued differently from the amount reflected in these unaudited pro forma condensed combined financial statements.
 
Based on the above information, the purchase consideration (based on the VimpelCom share price of 17 January 2011) for the Wind Telecom acquisition is determined as follows:
 
         
Fair value of consideration transferred to Wind Telecom shareholders
  US$ 6,490  
Less indemnification asset
    (450 )
         
Total purchase consideration transferred for Wind Telecom
  US$ 6,040  
         
 
The fair value of the purchase consideration will fluctuate until the Transaction closes, as a significant portion of the consideration is based on the fair value of VimpelCom’s share price.
 
Preliminary purchase accounting has been applied to the pro forma condensed combined balance sheet as of September 30, 2010, as if the Transaction occurred at that date. The pro forma adjustments represent preliminary fair value adjustments to the assets and liabilities deemed acquired. The preliminary fair value allocation has been performed based on assessments of available information. The assessment of fair value adjustments will be reassessed and updated as necessary, and recognized in VimpelCom’s financial statements as of the Closing date in accordance with ASC 805.
 
The following is a summary of the various methods used to value the Wind Telecom assets purchased. Property and equipment and software have been valued primarily by using the replacement cost method. Mobile licenses have been valued using the Greenfield approach, market methods, and residual value methods. Customer relationships have been valued using the multiperiod excess earnings method. Brands have been valued primarily using the relief-from-royalty method.


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The following table presents the preliminary fair value adjustments to the net U.S. GAAP book value of the Wind Telecom assets acquired based on their estimated fair values at September 30, 2010:
 
                 
Total pro forma purchase consideration for Wind Telecom
          US$ 6,490  
Less, indemnification asset
            (450 )
                 
Adjusted pro forma purchase consideration
            6,040  
                 
Less, net U.S. GAAP book value of Wind Telecom assets acquired, including existing goodwill
            (2,244 )
Elimination of existing Wind Telecom Goodwill
            5,181  
                 
Excess pro forma purchase price, prior to preliminary fair value adjustments
            8,977  
                 
Preliminary fair value adjustments:
               
Property, plant and equipment
  US$ (639 )        
Intangible assets
    3,370          
Elimination of Wind Telecom debt issuance cost
    (494 )        
Other preliminary PPA-adjustments
    (870 )        
Less, deferred tax adjustments on preliminary fair value adjustments
    (696 )        
                 
Total preliminary fair value adjustments, net of tax
            672  
                 
Preliminary total goodwill
          US$ 8,306  
                 
 
The net U.S. GAAP book value of the Wind Telecom assets acquired includes the equity impact of the sale of Orascom Telecom Tunisia (see Note 3) and the Wind Telecom’s contingently redeemable shares presented in the “mezzanine” section of the balance sheet of US$1,867 million.
 
The following items describe the acquisition of Wind Telecom pro forma adjustments further:
 
  (a)  Reflects the cash consideration proposed to be paid to the Wind Telecom Shareholders as part of the Transaction totaling US$1.495 billion.
 
  (b)  Reflects the deferred tax adjustments on the fair value adjustments, calculated at respective statutory tax rates.
 
  (c)  Preliminary fair values of property, plant and equipment as of September 30, 2010, and estimated remaining useful lives, in years, are estimated as follows:
 
                 
          Estimated
 
          Remaining
 
          Useful Life  
 
Estimated fair value of property, plant and equipment
  US$ 7,251       6-10  
Less, total book value of property, plant and equipment
    7,891          
                 
Estimated fair value adjustment to property, plant and equipment
  US$ (639 )        
                 
 
The estimated remaining useful lives for property, plant and equipment are based on a preliminary evaluation of the assets being acquired. As further evaluation of the property and equipment acquired is performed, there could be changes in the estimated remaining useful lives.
 
(d) Preliminary fair values for intangibles as of September 30, 2010 are estimated as follows:
 
                 
          Estimated
 
          Remaining
 
          Useful Life  
 
Total estimated fair value of intangible assets
    9,665       1-20  
Less, total book value of intangible assets
    6,295          
                 
Estimated fair value adjustment to intangible assets
  US$ 3,370          
                 
 
The estimated fair values and estimated remaining useful lives for intangible assets are based on a preliminary evaluation of the assets being acquired. As further evaluation of the intangible assets acquired is performed, there could be changes in the estimated fair values and estimated remaining useful lives.


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  (e)  The pro forma adjustment to goodwill was calculated based on the estimated fair values of the purchase consideration paid and the estimated fair values of the assets acquired and liabilities assumed, as calculated above, totaling approximately US$8.3 billion.
 
         
Preliminary goodwill
  US$ 8,306  
Less, existing Wind Telecom goodwill
    5,181  
         
Estimated pro forma adjustment to goodwill
  US$ 3,125  
         
 
            As VimpelCom completes the purchase price allocation, this excess may be allocated to other identified tangible or intangible assets, which could be depreciable or amortizable.
 
  (f)  Reflects the recognition of the US$450 million indemnification asset provided to VimpelCom from Wind Telecom, less the elimination of US$494 million of deferred finance costs relating to costs capitalized in conjunction with Wind Telecom’s historical debt issuances at OTH and Wind Italy and the elimination of US$57 million of capitalized hedging costs included on the Wind Telecom balance sheet as of September 30, 2010.
 
  (g)  Reflects the elimination of certain deferred revenue amounts on the acquired Wind Telecom balance sheet. These amounts relate primarily to a deferred gain on a sale-leaseback transaction and deferred customer connection fees.
 
  (h)  Reflects the recognition of potential acquired contingencies as well as other purchase price accounting adjustments.
 
  (i)  Reflects the elimination of the US$1,867 million contingently redeemable shares of Wind Telecom acquired in conjunction with the Transaction. These shares have been included in the net assets acquired, as included in the goodwill calculation above.
 
  (j)  Reflects the net impact on the pro forma equity due to the estimated fair value of the VimpelCom common shares issued to Wind Telecom shareholders as part of the consideration for the Transaction, offset by the elimination of Wind Telecom’s historical combined equity balance and the equity impact related to the sale of Orascom Telecom Tunisia.
 
         
Estimated fair value of the VimpelCom shares issued to Wind Telecom shareholders
  US$ 4,995  
Less, net U.S. GAAP book value of Wind Telecom equity and equity impact of sale of Tunisia
    377  
         
Estimated pro forma adjustment to shareholders’ equity
  US$ 4,618  
         
 
            The fair value of the purchase consideration will fluctuate until the Transaction closes, as a significant portion of the consideration is based on the fair value of VimpelCom’s share price.
 
            As the purchase price allocation is finalized, the fair value adjustments may be further allocated to the minority interest.
 
Note 5 — Financing adjustments (Balance Sheet)
 
In order to fund the Transaction, VimpelCom has arrangements in place to borrow additional amounts of up to US$6.5 billion from Russian and international banks. VimpelCom will utilize a portion of these arrangements to finance the cash portion of the Transaction and to refinance existing debt of OTH and related entities, which have become due upon Closing of the Transaction. The sources and uses of the overall financings are presented below.
 


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    Sources         Uses  
 
Bridge loan
  US$ 1,300     Orascom Telecom Oscar S.A. (Luxembourg)   US$ 243  
Loan participation notes
    1,500     Orascom Telecom Holding S.A.E. (Egypt)     1,750  
Term loan
    2,500     Weather Capital Special Purpose I S.A. (Luxembourg)     607  
            Orascom Telcom Finance S.C.A. (Luxembourg)     780  
            Acquisition of Wind Telecom S.p.A.     1,495  
            Financing of spin-off assets     300  
            Transaction costs     125  
                     
    US$ 5,300         US$ 5,300  
                     
 
VimpelCom plans to raise the funds for the financing of the planned Transaction through currently projected borrowings of US$1.3 billion under a US$4.0 billion bridge loan, US$1.5 billion in proceeds from loan participation notes loaned to a Russian subsidiary and a US$2.5 billion term loan. Total expected funds approximate US$5.3 billion.
 
The funds will be mainly used to repay/refinance existing debt per the Share Sale and Exchange Agreement, which totals approximately US$3.4 billion, to pay the US$1.495 billion cash portion of the purchase consideration for the Wind Telecom acquisition, to finance the spin-off assets of approximately US$300 million, and pay approximately US$125 million in debt issue costs, which have been assumed to be capitalized on the balance sheet.
 
Further to the above, US$658 million from the proceeds from the sale of Orascom Telecom Tunisia were used to pay down existing OTH debt.
 
In addition to the above financing and refinancing of the Transaction, Wind Telecom and OTH, certain debt at Wind was refinanced in November 2010, as presented below:
 
                     
    Sources         Uses  
 
Senior term loan A
  US$ 2,060     Senior term loan A   US$ 1,122  
Senior term loan B
    2,740     Senior term loan B     2,070  
2018 High yield
    3,688     Senior term loan C     2,070  
            Second lien     936  
            2015 high yield     2,059  
            Transaction costs     231  
                     
    US$ 8,488         US$ 8,488  
                     
 
Certain of the existing Wind debt was refinanced through approximately US$4.8 billion of senior facilities and approximately US$3.7 billion from high yield bonds. Total new sources of funds approximated US$8.5 billion.
 
The funds described above were used to repay existing debt per the Share Sale and Exchange Agreement and the Refinancing Plan, which totals approximately US$8.3 billion and pay approximately US$230 million in debt issue costs, which have been assumed to be capitalized on the balance sheet.
 
The following items describe the Financing pro forma adjustments further:
 
  (a)  Reflects the net cash generated from the financings described above.
 
  (b)  Reflects the capitalization of the estimated debt issue costs of US$125 million, estimated to be incurred by VimpelCom, amongst others, for the OTH financing and US$231 million for the Wind refinancing.
 
  (c)  Reflects the increase in the debt position considering the estimated proceeds from the financing, less the planned refinancing of the existing debt.
 
Note 6 — Other adjustments (Balance Sheet)
 
The intercompany balance sheet positions as of September 30, 2010 between VimpelCom and Wind Telecom were not material.

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Note 7 — Kyivstar purchase accounting adjustments (Income Statement)
 
VimpelCom acquired control of Kyivstar on April 21, 2010. See Note 1 for a description of the transaction.
 
  (a)  The adjustment to operating revenue reflects the reversal of deferred revenue recognized by Kyivstar for which VimpelCom has no further contractual performance obligation as of January 1, 2009. These deferred amounts had been recognized in Kyivstar’s historical statements of income for the nine months ended September 30, 2010 and the year ended December 31, 2009. The following table shows the effects of reversing these amounts, including an applied statutory tax rate with respect to the Kyivstar adjustments of 25.0%:
 
                 
    Nine Months Ended
  Year Ended
    September 30, 2010   December 31, 2009
 
Operating revenues
    (7 )     (34 )
Income tax benefit
    2       9  
 
  (b)  The pro forma adjustment reflects elimination of intercompany transactions between Kyivstar and OJSC VimpelCom:
 
                 
    Nine Months Ended
  Year Ended
    September 30, 2010   December 31, 2009
 
Operating revenues
    (23 )     (87 )
Service costs
    (23 )     (87 )
 
  (c)  Preliminary purchase accounting has been applied to the unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2010 and the year ended December 31, 2009, as if the Kyivstar acquisition had occurred at January 1, 2009. Kyivstar financial information in Ukrainian hryvnia has been translated to U.S. dollars applying an average exchange rate of 7.92 and UAH 7.79 per U.S. dollar for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively. As required by ASC 805 related to the purchase accounting in connection with the Kyivstar acquisition, pro forma adjustments have been made to reflect additional depreciation and amortization as follows:
 
                 
    Nine Months Ended
  Year Ended
    September 30, 2010   December 31, 2009
 
Depreciation
    (14 )     (56 )
Amortization
    (50 )     (205 )
Income tax benefit
    16       65  
 
The statutory income tax rate of 25.0% has been applied to the pro forma adjustments noted above. VimpelCom did not identify intangibles with indefinite useful life except for goodwill.
 
A portion of the customer relationships will be amortized using the declining balance method over 9 and 8 years for contract and prepaid customers, respectively. The estimated amortization charge for the next five years is as follows:
 
         
Year
  Amount
    (in thousands)
 
2010
  US$ 135,387  
2011
    100,049  
2012
    74,030  
2013
    54,847  
2014
    40,687  
 
Note 8 — Preliminary purchase price allocation for Wind Telecom (Income Statement)
 
VimpelCom has proposed to acquire 100% of Wind Telecom. See Note 4 for a description of the proposed Transaction.
 
Preliminary purchase accounting has been applied to the unaudited pro forma condensed combined statement of income for the year ended December 31, 2009, as if the Transaction had occurred at January 1, 2009. As required by ASC 805 related to the purchase accounting in connection with the Transaction, pro forma adjustments have been made to reflect estimated impacts of the following preliminary purchase accounting adjustments.
 
  (a)  Reflects the elimination of revenues due to the reversal of acquired deferred revenues on the balance sheet. Assuming the Transaction occurred on January 1, 2009, such amounts would have not been recognized.


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  (b)  Depreciation has been calculated on the estimated fair value adjustments taking into account the estimated remaining useful life of the acquired property, plant and equipment. The estimated remaining useful lives for the property, plant and equipment are based on a preliminary evaluation of the assets being acquired. As further evaluation of the property and equipment acquired is performed, there could be changes in the estimated remaining useful lives.
 
  (c)  Amortization has been calculated on the estimated fair value adjustments taking into account the estimated remaining useful life of the acquired intangible assets. The estimated remaining useful lives for intangible assets are based on a preliminary evaluation of the assets being acquired. As further evaluation of the intangible assets acquired is performed, there could be changes in the estimated remaining useful lives.
 
  (d)  Assuming the Transaction closed January 1, 2009, the interest expense incurred on the redeemable shares would not have been incurred. Accordingly, US$178 million and US$135 million of interest expense associated with these instruments have been eliminated for the year ended December 31, 2009 and the nine months ended September 30, 2010, respectively.
 
  (e)  Income taxes have been estimated based on the above adjustments taking into consideration the local jurisdictions and estimated income tax rates.
 
As discussed in Note 4, a portion of the excess purchase price has been allocated to goodwill, based on a preliminary assessment of the fair values of assets acquired and liabilities assumed. As VimpelCom finalizes the purchase price allocation, this excess may be allocated to other identified tangible or intangible assets, which could be depreciable or amortizable, and other assets acquired and liabilities assumed.
 
Note 9 — Financing adjustments (Income Statement)
 
VimpelCom will finance the Transaction with debt and refinance certain existing debt per the Share Sale and Exchange Agreement, as further described in Note 5.
 
  (a)  Represents an estimate of the incremental interest expense related to the borrowings expected to be incurred as described in Note 5. Therefore the US$93 million and the US$124 million estimated pro forma adjustment represents the estimated incremental interest expense for the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively, of the assumed newly issued debt versus the refinanced, historical debt.
 
No further financing adjustments have been made to the unaudited pro forma condensed combined income statement for the elimination of existing Wind Telecom debt issue costs and the recognition of pro forma debt issue costs for the refinanced debt, as the amounts offset each other and would not result in a significant adjustment.
 
  (b)  Represents the tax impacts of the above adjustments assuming a blended statutory rate.
 
Note 10 — Other adjustments (Income Statement)
 
Intercompany transactions during the nine months ended September 30, 2010 and the year ended December 31, 2009 were nil and US$3.5 million, respectively, between VimpelCom and Wind Telecom, and have been eliminated.
 
No significant “one time” transaction costs related to the Transaction were incurred by either VimpelCom or Wind Telecom during the nine months ended September 30, 2010 or the year ended December 31, 2009, which should be considered for adjustment in the unaudited pro forma condensed combined income statement.
 
Note 11 — Pro forma earnings per share (EPS)
 
The pro forma basic earnings per share of VimpelCom were calculated as the sum of the VimpelCom weighted average basic shares outstanding as of September 30, 2010, plus the approximate 326 million VimpelCom common shares to be issued to the Wind Telecom Shareholders as part of the Transaction consideration.
 
The pro forma diluted earnings per share of VimpelCom were calculated based on the VimpelCom weighted average diluted shares outstanding as of September 30, 2010, plus the approximate 326 million VimpelCom common shares and any dilutive impact of the 305 million convertible preferred shares issued as part of the Transaction consideration. VimpelCom applies the treasury stock method when calculating the dilutive impact of the convertible preferred shares, as provided in ASC 260. Because the average market price during the periods was


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lower than the exercise price of the convertible preferred shares, the preferred convertible shares are anti-dilutive, and have therefore been excluded from pro forma diluted earnings per share calculation.
 
The tables below include the calculation of the pro forma basic and diluted earnings per share, as discussed above:
 
         
    (Thousands of shares)  
 
Pro Forma basic EPS
       
VimpelCom Ltd. basic shares outstanding as of September 30, 2010
    1,178,629  
Number of VimpelCom Ltd. common shares issued to Wind Telecom shareholders
    325,640  
         
Pro Forma basic shares outstanding as of September 30, 2010
    1,504,269  
         
 
         
    (Thousands of shares)  
 
Pro forma diluted EPS
       
VimpelCom Ltd. diluted shares outstanding as of September 30, 2010
    1,179,141  
Number of VimpelCom Ltd. common shares issued to Wind Telecom shareholders
    325,640  
Number of dilutive shares associated with convertible preferred shares issued
     
         
Pro Forma diluted shares outstanding as of September 30, 2010
    1,504,781  
         
 
Note 12 — Other Information
 
Described below are various events which have not been considered in the pro forma adjustments described above:
 
  (a)  The Unaudited Pro Forma Condensed Combined Financial Information includes the assets, liabilities and results of operations of OTH’s Algerian subsidiary OTA. There is currently an ongoing dispute between OTH and the Algerian Government regarding OTA. VimpelCom is interested in exploring with the Algerian Government a resolution which would allow VimpelCom to retain OTA following Closing of the Transaction. In the event that such a resolution is not possible within a reasonable time frame, VimpelCom has reached a value sharing arrangement with Weather II which provides for any financial losses or gains arising from the sale of all or part of OTA to the Algerian Government or from the eventual settlement of the disputes between OTA and the Algerian Government to be shared in certain pre-agreed proportions between VimpelCom and Weather II. See “The Transaction — Algerian Value Sharing Arrangement” for more detail.
 
  (b)  In connection with the planned spinoff of certain assets and liabilities currently excluded from the Transaction, transitional service agreements (“TSAs’’) have been entered into between parties. No adjustments have been reflected in the Unaudited Pro Forma Condensed Combined Financial Information for TSAs.
 
  (c)  For purposes of the Unaudited Pro Forma Condensed Combined Financial Information, the intercompany balances between the spin-off entities and Wind Telecom have been included within equity.
 
  (d)  On November 15, 2010 VimpelCom announced that its Supervisory Board declared the payment of an interim dividend of US$0.46 per American depositary share, which amounted to a total interim dividend payment of approximately US$600 million. The interim dividend was paid in December 2010 and was in accordance with VimpelCom’s dividend policy. No adjustments have been reflected in the Unaudited Pro Forma Condensed Combined Financial Information for this dividend payment.
 
  (e)  The unaudited pro forma condensed combined balance sheet as of September 30, 2010 has been translated using the historical exchange rate of 1.36 U.S. dollars per Euro as of September 30, 2010. As of February 7, 2011, this exchange rate also approximates 1.36 U.S. dollars per Euro. Fluctuations in exchange rates will result in material adjustments to the final combined balance, including any preliminary purchase accounting adjustments.


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Note 13 — Pro Forma combined balance sheet of Wind Telecom as of September 30, 2010
 
The following shows the balance sheet of Wind Telecom, adjusted for the carve outs and U.S. GAAP adjustments, as of September 30, 2010 (unaudited):
 
                                                 
          Adjustments        
    Wind Telecom
    Carve Out
    Carve Out
    Carve Out
    U.S. GAAP
    Wind Telecom
 
    IFRS
    Hellas
    Wind Spin
    OTH Spin
    Adjustments
    Combined Pro
 
    Consolidated     Business     Off Assets     Off Assets     and Reclasses     Forma U.S. GAAP  
USD millions  
 
Assets
                                               
Current Assets:
                                               
Cash and cash equivalents
  US$ 1,492     US$ (34 )   US$ (34 )   US$ (189 )   US$     US$ 1,235  
Trade accounts receivable, net of allowance for doubtful accounts
    2,426       (223 )     (229 )     (103 )     2       1,873  
Inventory
    82       (10 )           (1 )           71  
Deferred income taxes
                                   
Input value added tax
    192       (22 )     (4 )     (1 )           165  
Due from related parties
                                   
Other current assets
    1,217       (60 )           (19 )     (4 )     1,134  
                                                 
Total current assets
    5,409       (349 )     (267 )     (313 )     (2 )     4,478  
                                                 
Property and equipment, net
    9,252       (813 )     (37 )     (507 )     (4 )     7,891  
Goodwill
    5,224             (1 )     (42 )           5,181  
Other intangible assets, net
    6,915       (528 )     (213 )     (165 )     (108 )     5,901  
Software, net
    492       (88 )     (7 )     (2 )     (1 )     394  
Investments in associates
    1,042                   (1,042 )            
Other assets
    2,014       (49 )     (1 )     205       498       2,667  
                                                 
Total assets
  US$ 30,348     US$ (1,827 )   US$ (526 )   US$ (1,866 )   US$ 383     US$ 26,512  
                                                 
Liabilities, redeemable noncontrolling interest and equity
                                               
Current liabilities:
                                               
Accounts payable
  US$ 3,163     US$ (257 )   US$ (281 )   US$ (91 )   US$ (10 )   US$ 2,524  
Due to employees
    159       (7 )           (6 )           146  
Due to related parties
                            5       5  
Accrued liabilities
    1,529       (163 )     (42 )     (125 )     23       1,222  
Taxes payable
    345       (3 )     7       (4 )           345  
Customer advances, net of VAT
    465       (21 )           (15 )           429  
Customer deposits
    37                   (2 )           35  
Short-term debt
    4,115       (2,928 )     16       (59 )     (16 )     1,128  
                                                 
Total current liabilities
    9,813       (3,379 )     (300 )     (302 )     2       5,834  
                                                 
Deferred income taxes
    1,476       (165 )     (69 )                 1,242  
Long-term debt
    18,606                   (8 )     (1,409 )     17,189  
Other non-current liabilities
    845       (50 )     (5 )     (3 )     (14 )     773  
Commitments, contingencies and uncertainties
                                   
                                                 
Total liabilities
    30,740       (3,594 )     (374 )     (313 )     (1,421 )     25,038  
                                                 
Redeemable noncontrolling interest
                            1,867       1,867  
Equity
    (1,559 )     1,681       (152 )     (1,530 )     777       (783 )
Noncontrolling interest
    1,167       86             (23 )     (840 )     390  
                                                 
Total equity
    (392 )     1,767       (152 )     (1,553 )     (63 )     (393 )
                                                 
Total liabilities, redeemable noncontrolling interest and equity
  US$ 30,348     US$ (1,827 )   US$ (526 )   US$ (1,866 )   US$ 383     US$ 26,512  
                                                 


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Note 14 — Pro Forma combined income statement of Wind Telecom for the nine months ended September 30, 2010
 
The following shows the income statement of Wind Telecom, adjusted for the carve outs and U.S. GAAP adjustments, for the nine months ended September 30, 2010 (unaudited):
 
                                                 
          Adjustments        
    Wind Telecom
    Carve out
    Carve out
    Carve out
    U.S. GAAP
    Wind Telecom
 
    IFRS
    Hellas
    Wind Italy Spin-
    OTH Spin-Off
    adjustments
    Combined Pro
 
USD in millions
  Consolidated     business     Off assets     Assets     and reclasses     Forma U.S. GAAP  
 
Net operating revenues
  US$ 9,391     US$ (790 )   US$ (267 )   US$ (406 )   US$ 32     US$ 7,960  
Operating expenses:
                                               
Service costs
    2,726       (247 )     (168 )     (110 )     (507 )     1,694  
Cost of equipment and accessories
    410       (68 )     (13 )     (22 )           307  
Selling, general and administrative expenses
    2,533       (286 )     (14 )     (37 )     651       2,846  
Depreciation
    1,221       (108 )     (1 )     (40 )     (5 )     1,066  
Amortization
    563       (130 )     (1 )     (15 )     (86 )     330  
Impairment loss
    1,041       (995 )           (24 )     1       23  
Provision for doubtfull accounts
    119       (28 )     (1 )     (12 )           77  
                                                 
Total operating expenses
    8,612       (1,864 )     (199 )     (260 )     54       6,343  
                                                 
Operating income
    778       1,074       (68 )     (146 )     (22 )     1,617  
Other income and expenses:
                                               
Interest income
    165       (17 )           (3 )     (71 )     75  
Net foreign exchange (loss)/gain
    (81 )     1       (1 )     4             (77 )
Interest expense
    (1,725 )     198             8       314       (1,204 )
Equity in net (loss)/gain of associates
    (81 )                 (19 )           (101 )
Other (expenses)/income, net
                            (218 )     (218 )
                                                 
Total other income and expenses
    (1,722 )     183       (1 )     (10 )     26       (1,525 )
                                                 
Income before income taxes
    (943 )     1,257       (70 )     (156 )     3       92  
Income tax expense
    325       (18 )     (14 )     (41 )     (4 )     247  
                                                 
Net income
    (1,268 )     1,275       (56 )     (115 )     7       (156 )
Net (loss)/income attributable to the noncontrolling interest
    468             6       (499 )     10       (15 )
                                                 
Net income attributable to Vimpelcom
  US$ (1,736 )   US$ 1,275     US$ (61 )   US$ 384     US$ (3 )   US$ (141 )
                                                 


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Note 15 — Pro Forma combined income statement of Wind Telecom for the year ended December 31, 2009
 
The following shows the income statement of Wind Telecom, adjusted for the carve outs and U.S. GAAP adjustments, for the year ended December 31, 2009 (unaudited):
 
                                                 
          Adjustments        
    Wind Telecom
    Carve out
    Carve out
    Carve out
    U.S. GAAP
    Wind Telecom
 
    IFRS
    Hellas
    Wind Italy Spin-
    OTH Spin-
    adjustments
    Combined Pro
 
USD in millions
  Consolidated     business     Off Assets     Off Assets     and reclasses     Forma U.S. GAAP  
 
Net operating revenues
  US$ 14,378     US$ (1,473 )   US$ (388 )   US$ (1,413 )   US$ 6     US$ 11,109  
Operating expenses:
                                               
Service costs
    4,155       (455 )     (236 )     15       (1,176 )     2,304  
Cost of equipment and accessories
    751       (141 )     (13 )           (42 )     556  
Selling, general and administrative expenses
    3,931       (462 )     (18 )           456       3,909  
Depreciation
    1,903       (153 )     (1 )           (213 )     1,536  
Amortization
    701       (188 )     (1 )           (46 )     466  
Impairment loss
    2,202       (2,163 )                 (3 )     36  
Provision for doubtfull accounts
    159       (29 )     (4 )           (11 )     114  
                                                 
Total operating expenses
    13,802       (3,590 )     (274 )     15       (1,034 )     8,921  
                                                 
Operating income
    576       2,117       (114 )     (1,429 )     1,039       2,188  
Other income and expenses:
                                               
Interest income
    2,076       (1,733 )                 (107 )     235  
Net foreign exchange (loss)/gain
    25             1                   26  
Interest expense
    (2,651 )     465                   555       (1,632 )
Equity in net (loss)/gain of associates
    (47 )                             (47 )
Other (expenses)/income, net
                            (391 )     (391 )
                                                 
Total other income and expenses
    (598 )     (1,269 )     1             57       (1,808 )
                                                 
Income before income taxes
    (22 )     849       (113 )     (1,429 )     1,096       380  
Income tax expense
    689       3       (18 )           (104 )     569  
                                                 
Net income
    (711 )     846       (95 )     (1,429 )     1,201       (189 )
Net (loss)/income attributable to the noncontrolling interest
    216             15       (149 )     9       92  
                                                 
Net income attributable to Vimpelcom
  US$ (926 )   US$ 846     US$ (110 )   US$ (1,280 )   US$ 1,191     US$ (281 )
                                                 


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RISK FACTORS
 
In addition to the risk factors set forth below, you should read and consider other risk factors specific to VimpelCom and Wind Telecom businesses that will also affect VimpelCom after completion of the Transaction which are set out in Annex A and Annex B to this proxy statement. If any of the risks described below or in Annex A or Annex B actually occurs, the respective businesses, financial results, financial conditions, operating results of VimpelCom or the share price of VimpelCom common shares or VimpelCom ADSs could be materially adversely affected.
 
Risk Factors Relating to the Transaction
 
The integration of Wind Telecom into the VimpelCom group may not occur as planned.
 
With the acquisition of Wind Telecom, the VimpelCom group will have a significantly diversified revenue base, an attractive mix of developed and emerging market assets in Eastern Europe, Asia and Africa and a more balanced growth profile between increasing market penetration and growing usage. To take advantage of this diversification, our management is required to devote a significant amount of time and resources to the process of integrating the operations of Wind Telecom with VimpelCom’s operations, which may decrease the time management has to manage the combined company’s business, service existing clients, attract new clients, develop new services or strategies and respond to increasing forms of competition. If we are unable to manage the combined business effectively or to integrate the businesses successfully, it could have a material adverse effect on our business, financial condition and results of operations.
 
Our rationale behind the Transaction is based on certain beliefs and assumptions, among others, that the assets of VimpelCom and Wind Telecom are complementary, that demand for mobile data services in our markets is set to grow significantly and that the combination will result in synergies with a net present value of approximately US$2.5 billion, primarily derived from procurement, operational expenses and capital expenditures. If any of our fundamental beliefs or assumptions proves to be incorrect or if we are unable to effectively execute our strategy, the return on our substantial investment in Wind Telecom may not materialize and our business, financial condition and results of operations could be materially adversely affected.
 
Telenor opposes the Transaction and has challenged it.
 
In a letter dated January 9, 2011, Altimo wrote to VimpelCom that an affiliate of Altimo owns shares in OTH sufficient in value for the Transaction to be treated as a “Related M&A Transaction” under the VimpelCom shareholders agreement among VimpelCom and certain Telenor and Altimo entities (the “VimpelCom Shareholders Agreement”). The VimpelCom Shareholders Agreement provides that the issuance of VimpelCom shares in a Related M&A Transaction is not subject to any pre-emptive rights for Altimo or Telenor. At its meeting on January 16, 2011, VimpelCom’s Supervisory Board concluded that the Transaction should be regarded as a Related M&A Transaction and therefore is not subject to any pre-emptive rights for either Altimo or Telenor under the VimpelCom Shareholders Agreement. The Supervisory Board approved the Transaction by a vote of six to three. The three Telenor nominees on the Supervisory Board voted against the Transaction. The three Altimo nominees on the Supervisory Board and the three independent members of the Supervisory Board voted for the Transaction.
 
On January 28, 2011, Telenor commenced arbitration proceedings against each of Altimo and VimpelCom (the “Arbitration Proceedings”) for the stated purpose of “enforcing its alleged pre-emptive rights under the VimpelCom Shareholders Agreement” with respect to VimpelCom shares to be issued in the Transaction. On February 7, 2011, Telenor commenced proceedings in the Commercial Court in London seeking an injunction (the “Injunction Request”) which, if granted, would prevent VimpelCom from proceeding with the Special General Meeting until after the arbitration tribunal has reached a final decision in the Arbitration Proceedings, unless VimpelCom authorizes and issues to Telenor its alleged pre-emptive shares on the basis that the Transaction is not a “Related M&A Transaction” under the VimpelCom Shareholders Agreement. A hearing on the Injunction Request is scheduled for February 25, 2011.
 
In the Arbitration Proceedings, Telenor specifically seeks an award declaring that Altimo affiliates breached the VimpelCom Shareholders Agreement by violating an obligation of good faith and fair dealing under New York


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law and alleged similar obligations under the VimpelCom Shareholders Agreement, that VimpelCom breached the VimpelCom Shareholder Agreement by declaring the Transaction to be a Related M&A Transaction, and that the Transaction is not a Related M&A Transaction. Telenor is also seeking to compel VimpelCom and Altimo to permit Telenor to exercise pre-emptive rights in connection with the Transaction, and requests interim relief during the Arbitration Proceedings to protect Telenor’s rights as a shareholder in VimpelCom and as party to the VimpelCom Shareholders Agreement. Telenor is also seeking damages for the alleged violations by Altimo affiliates and VimpelCom in an amount to be determined in the Arbitration Proceedings and its costs and expenses in the Arbitration Proceedings. Telenor has also asked for any other relief that the arbitral tribunal deems just and proper, which may subject us to other legal or equitable remedies under the Arbitration Proceedings or in any other court, tribunal or forum. If an injunction is granted pursuant to the Injunction Request or otherwise pursuant to the Arbitration Proceedings, it could result in the Transaction failing to close, which could adversely affect our future prospects and growth.
 
In addition, the resumption of legal proceedings between Altimo and Telenor, and Telenor’s opposition to the Transaction, could cause the relationship between Altimo and Telenor to deteriorate. As a result of the disputes among our largest shareholders and claims made against us, we could suffer material adverse effects on our business, financial condition, results of operations and prospects.
 
If Telenor is successful in the Arbitration Proceedings, it could lead to significant dilution to VimpelCom’s minority shareholders.
 
If Telenor prevails in the Arbitration Proceedings and the arbitration tribunal determines that pre-emptive rights do apply to the issuance of the VimpelCom shares in the Transaction, then VimpelCom ADS holders (the “VimpelCom Minority Shareholders”) could suffer significant economic and voting dilution. Currently the VimpelCom Minority Shareholders hold approximately 20.4% of the VimpelCom common shares and approximately 18.6% of the VimpelCom voting shares. Following the Closing of the Transaction and assuming no pre-emptive rights apply, the VimpelCom Minority Shareholders will hold approximately 16.3% of the VimpelCom common shares and approximately 12.9% of the VimpelCom voting shares. Following the Closing of the Transaction, and assuming that an arbitration tribunal were to determine that pre-emptive rights do apply and assuming further that each of Telenor and Altimo exercise its respective pre-emptive rights in full, then the VimpelCom Minority Shareholders would hold approximately 9.4% of the VimpelCom common shares and approximately 5.7% of the VimpelCom voting shares. In each case, the above percentages are calculated assuming that VimpelCom acquires 100% of Wind Telecom shares at Closing and excluding VimpelCom shares held by its subsidiaries.
 
We may not realize the anticipated benefits from the Transaction and we may assume unexpected or unforeseen liabilities and obligations or incur greater than expected liabilities in connection with the Transaction.
 
The actual outcome of the Transaction and its effect on VimpelCom and the results of our operations may differ materially from our expectations as a result of the following factors, among others:
 
  •  past and future compliance with the terms of the telecommunications licenses and permissions of the Wind Telecom group, its ability to renew licenses and frequency permissions and get additional frequencies and its past and future compliance with applicable laws, rules and regulations (including, without limitation, tax and customs legislation);
 
  •  unexpected or unforeseen liabilities or obligations or greater than expected liabilities incurred prior to or after the Transaction, including tax, customs, indebtedness and other liabilities;
 
  •  the Wind Telecom group’s inability to comply with the terms of its debt and other contractual obligations;
 
  •  the Wind Telecom group’s ability to obtain or maintain favorable interconnect terms;
 
  •  our inability to extract anticipated synergies from the Transaction or to integrate the Wind Telecom group’s business into our group in a timely and cost-effective manner;
 
  •  changes to the management structure as a result of the Transaction or the possible deterioration of relationships with employees and customers as a result of integration;


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  •  exposure to foreign exchange risks that are difficult or expensive to hedge;
 
  •  the Wind Telecom group’s inability to protect its trademarks and intellectual property and to register trademarks and other intellectual property used by it in the past;
 
  •  developments in competition within each jurisdiction of Wind Telecom’s operations, including the entry of new competitors or an increase in aggressive competitive measures by competitors;
 
  •  governmental regulation of the relevant industry in each jurisdiction, ambiguity in regulation and changing treatment of certain license conditions;
 
  •  political, economic, social, legal and regulatory developments and uncertainties in each jurisdiction; and
 
  •  claims by third parties challenging the Wind Telecom group’s ownership of its assets or otherwise.
 
In addition, there are inherent risks in assessing the value, strengths and weaknesses of any transaction, and our assessment of the Transaction has been made on the basis of certain assumptions that are subject to significant uncertainty.
 
The Algerian Government has made substantial tax and other claims against OTA which have harmed OTA’s business and the Algerian Government has announced its intention to unilaterally acquire OTA from OTH.
 
OTH’s subsidiary OTA accounts for a significant proportion of OTH’s consolidated revenues. For the past several years, OTA has suffered from various ongoing measures taken by the Algerian Government and its various regulatory agencies. The Algerian tax authority has made substantial tax claims against OTA. See “Risks Relating to Wind Telecom’s Business — Risks Relating to OTH’s Business — OTH is currently subject to claims by the Algerian tax authority with respect of certain taxes, the outcome of which is uncertain” in Annex B. In addition, in 2010, the Bank of Algeria effected an injunction that restricts all Algerian banks from engaging in foreign banking transactions on behalf of OTA, making it difficult for OTA to import equipment from foreign suppliers and preventing OTA from transferring funds outside of Algeria, including by way of dividends or other distributions to OTH. The Algerian authorities have also alleged breaches of foreign exchange regulations which could result in significant fines being levied on OTA and a criminal investigation has been initiated by the Bank of Algeria. These and other measures taken by the Algerian Government and its agencies against OTA have adversely impacted the business, financial condition and results of operations of OTA and may continue into the future. See “Risks Relating to Wind Telecom’s Business — Risks Relating to OTH’s Business — OTH’s investments in Algeria are subject to ongoing disputes and may be affected by changes in the law” in Annex B.
 
Furthermore, the Algerian Government has announced its intention to unilaterally purchase OTA, alleging that it has the right to do so under the pre-emption right contained in the 2009 Finance Act and the 2010 Supplemental Finance Act. The value of OTA is to be determined by a valuation advisor retained by the Algerian Government. As discussed in this proxy statement under “The Transaction — Algerian Value Sharing Arrangement”, we have reached a value sharing arrangement with Weather II which provides for any financial losses or gains arising from the sale of all or part of OTA to the Algerian Government or from the eventual settlement of disputes between OTA and the Algerian Government to be shared in certain pre-agreed proportions between us and Weather II. Although this arrangement provides for significant downside protection for us with respect to the forced sale of OTA, OTA remains a strategically important asset for us and, therefore, we are interested in exploring with the Algerian Government a resolution which would allow us to retain OTA following completion of the Transaction. The loss of OTA could have an adverse effect on the value, and future prospects, of Wind Telecom. See “Risks Relating to Wind Telecom’s Business — Risks Relating to OTH’s Business — OTH’s investments in Algeria are subject to ongoing disputes and may be affected by changes in the law” in Annex B.
 
The Transaction is subject to satisfaction or waiver of several conditions.
 
Completion of the Transaction is subject to a number of conditions precedent, including approval of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal, receipt of consent required under competition and anti-trust laws in certain jurisdictions, completion of actions and transactions required to be completed


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before Closing pursuant to the Refinancing Plan and absence of injunctions prohibiting the transfers of the Wind Telecom Shares to VimpelCom and the issuance of VimpelCom common shares and convertible preferred shares to Weather II and the Wind Telecom Shareholders. Each of VimpelCom and Wind Telecom has the right to terminate the Transaction at any time prior to the Obligation Date. There can be no assurance that all of the conditions will be satisfied or waived in a timely manner or at all. A substantial delay in the satisfaction or waiver of all conditions precedent or completion could jeopardize the ultimate completion of the Transaction. A delay in completion of the Transaction or a failure to complete the Transaction could have a material adverse effect our business, financial condition and results of operations. For more information about the conditions to Closing, see “The Share Sale and Exchange Agreement — Conditions to Closing”.
 
Our current leverage will substantially increase as a result of the Transaction.
 
On completion of the Transaction, our indebtedness for the combined group of companies will be greater than our current outstanding indebtedness. As of September 30, 2010, our total debt for equipment financing, capital leases, bank and other loans was approximately US$6.5 billion on an actual basis and approximately US$8.0 billion on a pro forma basis after giving effect to the US$1.5 billion loan made to OJSC VimpelCom on February 2, 2011, from VIP Finance Ireland Limited with the proceeds of its loan participation notes issued on February 2, 2011. On a combined basis, assuming completion of the Transaction, the pro forma gross debt and net debt of the combined entity as of September 30, 2010 was US$24.8 billion and US$21.1 billion, respectively. After completion of the Transaction, the gross debt will increase to approximately US$26.3 billion, and the net debt will increase to approximately US$21.8 billion. This increase is based on the impact of the Transaction Consideration, the refinancing in November 2010 of debt associated with Wind Italy, receipt and application of proceeds of the sale of the OTH interest in its Tunisian business, and various other costs. For more information see Note 5 to our Unaudited Pro Forma Condensed Combined Financial Information.
 
We have arrangements in place to borrow additional amounts up to US$6.5 billion to finance the Transaction, although we currently expect borrowing to be less than the total of these arrangements. These arrangements are described in “The Refinancing Plan — Financings by VimpelCom”. We anticipate that our additional borrowing will be approximately US$5.3 billion, but additional amounts may be needed to fund required payments in the event the transfer of certain Wind Telecom assets under the Spin-Off Plan cannot be effected. For more information about the Spin-Off Plan, see “The Spin-Off Plan”.
 
Our substantial leverage and the limits imposed by our debt obligations could have significant negative consequences, such as requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for working capital, capital expenditures, acquisitions, joint ventures, dividends and other purposes; increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; limiting our ability to obtain additional financing and increasing the cost of such financing; and placing us at a possible competitive disadvantage relative to less leveraged competitors which have greater access to capital resources.
 
Our operating subsidiaries must generate sufficient net cash flow in order to meet our group’s debt service obligations, and we cannot assure you that we will be able to meet such obligations. If we are unable to generate sufficient cash flow or otherwise obtain funds necessary to make required payments, we would be in default under the terms of our indebtedness and the holders of our indebtedness would be able to accelerate the maturity of such indebtedness and could cause defaults under our other indebtedness.
 
If our group does not generate sufficient cash flow from operations in order to meet our debt service obligations, we may have to undertake alternative financing plans to alleviate liquidity constraints, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital expenditures or seeking additional capital. We cannot assure you that any refinancing or additional financing would be available on acceptable terms, or that assets could be sold, or if sold, the timing of the sales, whether such sales would be on satisfactory terms and whether the proceeds realized from those sales would be sufficient to meet our debt service obligations. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance debt on commercially reasonable terms, could materially adversely affect our business, financial condition, results of operations and business prospects.


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In addition, we intend to loan a substantial part of the proceeds of VimpelCom’s financings for the Transaction to Wind Telecom entities through intercompany loans primarily in order to refinance their existing debt. The Wind Telecom entities that will borrow under these intercompany loans to refinance their existing debt might not have sufficient cash flow to make payments to us that would cover our debt service obligations on our borrowings to fund those loans. As a result, we might have to meet those debt service obligations without assistance from the Wind Telecom entities.
 
Wind Telecom’s operations are in jurisdictions new to VimpelCom.
 
Following the Transaction, we will operate in 19 countries around the world, covering a population of approximately 838 million people, with over 173 million mobile subscribers. Management of the growth from the Transaction will require significant managerial and operational resources. We will rely on the existing Wind Telecom management team and employees to help us successfully manage our growth and operate in jurisdictions that are new to our group. However, there can be no assurance that we will be able to retain key employees of Wind Telecom, and if we are unable to successfully manage our growth, our further development could be hampered and our business, financial condition and results of operations could suffer.
 
In addition, the Wind Telecom group operates in jurisdictions which are subject to political, social and economic risk. For example, OTH is an Egyptian company listed on the Egyptian Stock Exchange. In January and February 2011 there have been widespread protests against the government, which had a negative impact on the share prices of companies listed on the Egyptian Stock Exchange and resulted in extensive disruption and damage throughout the country to public and private property and infrastructure. Mobile networks and services were also temporarily suspended by government order. Continued disorder in Egypt could adversely affect the Egyptian assets that will be part of the combined company following Closing. These events and similar events in other jurisdictions where Wind Telecom operates could adversely affect the business, prospects, financial condition and results of operations of the combined company following Closing.
 
The issuance of a significant number of VimpelCom Shares and a resulting “market overhang” could adversely affect the market price of VimpelCom ADSs after completion of the Transaction.
 
If the VimpelCom shareholders approve the proposals contained in this proxy statement and the Transaction is completed, we will issue 325,639,827 new common shares and 305,000,000 convertible preferred shares to Weather II and the Wind Telecom Shareholders. This will result in the total number of common shares increasing by 25% and the total number of preferred shares increasing by approximately 330%. Although Weather II is generally not permitted to transfer any of the VimpelCom common shares it receives at Closing for a period of six months pursuant to the Lock-Up Agreement, the newly issued common shares issued to the Wind Telecom Shareholders will not be subject to any contractual transfer restrictions. Accordingly, the Wind Telecom Shareholders may, and following the six month lock-up period Weather II may, convert such common shares into our ADSs for sale on the NYSE, subject to certain limitations under U.S. securities laws. The VimpelCom convertible preferred shares to be issued to Weather II and the Wind Telecom Shareholders may be converted into VimpelCom common shares at the option of the shareholder any time between 2.5 years and 5 years after their issuance at a price based on the NYSE price of VimpelCom ADSs. If the convertible preferred shares are converted into our common shares they will also become available for trading in the public market. The sale of any of the VimpelCom shares on the public markets or the perception that such sales may occur (commonly referred to as “market overhang”), may adversely affect the market for, and the market price of, VimpelCom’s ADSs.
 
A disposition by one or both of VimpelCom’s strategic shareholders of their respective stakes in VimpelCom or a change in control of VimpelCom could harm our business.
 
Our debt agreements have had, and in the future may have, “change of control” provisions that may require us to make a prepayment if certain parties acquire beneficial or legal ownership of or control over more than 50.0% of our shares, which could occur if certain parties acquired more than 50.0% of VimpelCom. If a change of control is triggered and we fail to make any required prepayment, this could lead to an event of default, and could trigger cross default/cross acceleration provisions under certain of our other debt agreements. In such event, our obligations


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under one or more of these agreements could become immediately due and payable, which would have a material adverse effect on our business, financial condition and results of operations.
 
It is not contemplated that the VimpelCom Shareholders Agreement will be amended in connection with the Transaction. The VimpelCom Shareholders Agreement will remain in effect following the Transaction, provided neither Telenor nor Altimo fall below a 25% voting stake in our company as a result of a transfer of any of their respective shares. If the VimpelCom Shareholders Agreement were to terminate, it could lead to further deterioration of the relationship between Telenor and Altimo which could harm our business.
 
We derive benefits and resources from the participation of Telenor and Altimo in the VimpelCom group. If either Telenor or Altimo were to dispose of its stake in VimpelCom, either voluntarily or involuntarily, our company may be deprived of the benefits and resources that it derives from Telenor and Altimo, respectively, which could have a material adverse effect on our business, financial condition and results of operations.
 
Risk Factors Relating to VimpelCom’s Businesses
 
You should read and consider other risk factors specific to VimpelCom’s businesses set out in Annex A to this proxy statement, as well as documents that have been filed by VimpelCom with the U.S. Securities and Exchange Commission (the “SEC”). See the section entitled “Where You Can Find More Information”.
 
Risk Factors Relating to Wind Telecom’s Businesses
 
You should read and consider other risk factors specific to Wind Telecom’s businesses, which will also affect VimpelCom after Closing of the Transaction, set out in Annex B to this proxy statement
 
THE SHARE SALE AND EXCHANGE AGREEMENT
 
The following is a summary of the material provisions of the Share Sale and Exchange Agreement. This summary has been included with this proxy statement to provide you with information regarding the terms of the Share Sale and Exchange Agreement and is not intended to provide any other factual information about us or Wind Telecom. You can find more information about us and Wind Telecom elsewhere in this proxy statement. Information about VimpelCom is also available in our other public reports filed with the SEC, which are available at www.sec.gov. This summary is not intended to modify or supplement any factual disclosures about VimpelCom in our public reports filed with the SEC.
 
The representations and warranties of the parties in the Share Sale and Exchange Agreement are subject to modification, qualification and limitation by the disclosure schedules to the Share Sale and Exchange Agreement. You should not rely on the representations and warranties as characterizations of the actual state of facts with respect to any information may contain material qualifications or exceptions thereto.
 
General
 
We entered into the Share Sale and Exchange Agreement with Wind Telecom and Weather II on January 17, 2010. Under the terms of the Share Sale and Exchange Agreement, VimpelCom will acquire the Wind Telecom Shares from Weather II and the Wind Telecom Shareholders in exchange for a combination of cash and VimpelCom common and convertible preferred shares, which consideration is described in more detail in “The Share Sale and Exchange Agreement — The Transaction Consideration”.
 
Closing
 
Closing is expect to occur promptly following the satisfaction or waiver of all the Closing conditions, which are summarized in “The Share Sale and Exchange Agreement — Conditions to Closing”, or at such other time, date or place agreed to by the parties.


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The Transaction Consideration
 
Under the terms of the Share Sale and Exchange Agreement, at Closing VimpelCom will acquire the Wind Telecom Shares in exchange for the following:
 
  •  $1.495 billion in cash multiplied by the percentage of the total Wind Telecom share capital (excluding shares held by Wind Telecom’s subsidiary, WAHF) represented by the Wind Telecom Shares being transferred to VimpelCom at Closing (the “Wind Share Percentage”);
 
  •  325,639,827 VimpelCom common shares multiplied by the Wind Share Percentage and 305,000,000 VimpelCom convertible preferred shares; and
 
  •  consideration resulting from the spin-off transactions pursuant to the Spin-Off Plan. See “The Spin-Off Plan”.
 
Under the terms of the Share Sale and Exchange Agreement, VimpelCom is not required to close unless it will acquire at Closing shares representing at least 98.04% of Wind Telecom’s share capital (excluding shares held by Wind Telecom’s subsidiary, WAHF).
 
Dividends
 
Under the terms of the Share Sale and Exchange Agreement, Weather II and the Wind Telecom Shareholders irrevocably direct VimpelCom not to make payment to them of dividends declared during or with respect to the 2010 financial year on VimpelCom common shares. This direction only applies to the first US$850 million declared and paid out with respect to the 2010 financial year. VimpelCom declared and paid out US$600 million in interim dividends with respect to the 2010 financial year prior to entering into the Share Sale and Exchange Agreement. The Share Sale and Exchange Agreement further provides that VimpelCom will declare US$850 million (hence a further $250 million) in interim dividend on VimpelCom common shares in respect of the 2010 financial year, but other than with respect to those dividends, VimpelCom is not permitted to set as a record date for additional dividends to holders of VimpelCom common shares any date occurring prior to June 1, 2011.
 
Representations and Warranties of the Parties
 
Representations and Warranties of Wind Telecom and Weather II Relating to the Wind Telecom Group; Representations and Warranties of VimpelCom
 
The Share Sale and Exchange Agreement contains various customary representations and warranties of Wind Telecom and Weather II relating to the Wind Telecom group and of VimpelCom.
 
The representations and warranties of Wind Telecom and Weather II relating to the Wind Telecom group, which are made to VimpelCom jointly and severally by Wind Telecom and Weather II, are qualified by the following:
 
  •  information contained in Wind Telecom’s disclosure schedules delivered in connection with the Share Sale and Exchange Agreement;
 
  •  the knowledge of certain key individuals and information in the international press with respect to the representations and warranties relating to OTH’s Algerian subsidiaries, operations, assets, or any direct or indirect benefits or liabilities derived from Algeria, including any action by a governmental entity;
 
  •  information contained in certain financial statements disclosed on Wind Italy’s and OTH’s websites and certain offering memoranda of the Wind Telecom group.
 
In addition, the representations and warranties of Wind Telecom and Weather II relating to the Wind Telecom group do not cover the following matters:
 
  •  matters arising between October 4, 2010 and Closing relating to OTH’s Algerian subsidiaries, operations, assets, or any direct or indirect benefits or liabilities derived from the Algerian subsidiaries, including any action by a governmental and other specified matters; and


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  •  any of the assets being transferred to Weather II pursuant to the Spin-Off Plan that are described under in “The Spin-Off Plan”, other than OTH’s holdings in MobiNil and ECMS.
 
All of the representations and warranties of VimpelCom are made to Wind Telecom and Weather II, and certain representations and warranties of VimpelCom, including with respect to the newly issued shares are made to the Wind Telecom Shareholders. All of the representations and warranties of VimpelCom are qualified by the following:
 
  •  information contained in VimpelCom’s disclosure schedules delivered in connection with the Share Sale and Exchange Agreement; and
 
  •  information disclosed in reports filed with or furnished to the SEC.
 
Some of the representations and warranties of VimpelCom and of Wind Telecom and Weather II relating to the Wind Telecom group in the Share Sale and Exchange Agreement are qualified by knowledge, materiality thresholds, or a “material adverse effect” qualifier. For purposes of the Share Sale and Exchange Agreement, the “material adverse effect” qualifier and its related definition contemplate any change, state of facts, circumstance, event or effect that is materially adverse to (A) the financial condition, businesses or results of operations of a party and its subsidiaries, taken as a whole (subject to certain exclusions outlined below); and/or (B) the ability of a party to perform its obligations under the Share Sale and Exchange Agreement or to consummate the transactions contemplated thereby. For the purposes of clause (A), an event will be considered to have a “material adverse effect” if, and only if, it results in a decrease of US$625 million or more in the shareholders equity (calculated as shareholders equity or equivalent line item on the consolidated balance sheets of the affected group in accordance with U.S. GAAP, in the case of the VimpelCom group, or IFRS, in the case of the Wind Telecom group) and amounts due pursuant to specified notifications from Italian tax authorities to Wind Italy and Wind Acquisition Financing S.p.A will not be considered a “material adverse effect”. See the section entitled “Risk Factors Relating to Wind Telecom’s Business — Risks Relating to Wind Italy’s Business — Wind Italy is subject to an audit by the Italian Tax Authority regarding withholding taxes on certain interest payments” in Annex B.
 
In addition, for purposes of clause (A) in the preceding paragraph, the term “material adverse effect” does not include any change, state of facts, circumstance, event or effect to the extent caused by or resulting from:
 
  •  changes in economic, market, business, regulatory or political conditions generally in jurisdiction of organization or any other jurisdiction in which such party operates, or in the global financial markets generally or in the financial markets of any such jurisdiction, except to the extent that such changes, state of facts, circumstances, events, or effects have a materially disproportionate effect on such party and its subsidiaries taken as a whole relative to other for profit industry participants operating in the same or similar businesses and markets;
 
  •  changes, circumstances or events generally affecting the industry in which such party operates, except to the extent that such changes, state of facts, circumstances, events, or effects have a materially disproportionate effect on such party and its subsidiaries taken as a whole relative to other for profit industry participants operating in the same or similar businesses and markets;
 
  •  changes in any law, except to the extent that such changes, state of facts, circumstances, events, or effects have a materially disproportionate effect on such party and its subsidiaries taken as a whole relative to other for profit industry participants operating in the same or similar businesses and markets;
 
  •  changes in generally accepted accounting principles (or local equivalents in the applicable jurisdiction), including accounting and financial reporting pronouncements by the SEC or the Financial Accounting Standards Board, as the case may be, except to the extent that such changes, state of facts, circumstances, events, or effects have a materially disproportionate effect on such party and its subsidiaries taken as a whole relative to other for profit industry participants operating in the same or similar businesses and markets;
 
  •  the commencement, occurrence or continuation of any hostilities, act of war, sabotage, terrorism or military actions, or any natural disasters or any escalation or worsening of any of the foregoing, except to the extent that such changes, state of facts, circumstances, events, or effects have a materially disproportionate effect on such party and its subsidiaries taken as a whole relative to other for profit industry participants operating in the same or similar businesses and markets;


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  •  the execution, delivery and announcement of the Share Sale and Exchange Agreement and the transactions contemplated thereby; or
 
  •  any action required to be taken or failure to act by and member of the Wind Telecom group or its affiliates (other than a specified matter) or VimpelCom or its affiliates pursuant to the terms of the Share Sale and Exchange Agreement.
 
In most instances, the representations and warranties of VimpelCom and of Wind Telecom and Weather II relating to the Wind Telecom group in the Share Sale and Exchange Agreement that are qualified by “material adverse effect” are qualified only to the extent the failure of such representations or warranties to be true and correct would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the VimpelCom group or the Wind Telecom group, as the case may be.
 
Representations and Warranties of Weather II and the Wind Telecom Shareholders Relating to the Wind Telecom Shares
 
The Share Sale and Exchange Agreement contains various customary representations and warranties of Weather II and the Wind Telecom Shareholders, including, among other things, title to its Wind Telecom Shares and absence of material pending or threatened legal and arbitration proceedings and investigations regarding the Transaction.
 
All of the representations and warranties of Weather II and the Wind Telecom Shareholders are made severally and not jointly to VimpelCom and are subject to Wind Telecom’s disclosure schedules delivered in connection with the Share Sale and Exchange Agreement.
 
Covenants
 
Conduct of Business Prior to Closing
 
VimpelCom has undertaken customary covenants to Wind Telecom and Weather II that place restrictions on it and its subsidiaries until the Closing under the Share Sale and Exchange Agreement. VimpelCom has agreed to, and to cause each of its subsidiaries to, with certain exceptions, conduct their business in the usual, regular and ordinary course consistent with past practice and use commercially reasonable efforts to (i) preserve intact their present business organization and (ii) maintain in effect their material permits.
 
VimpelCom has further agreed that, with certain exceptions, it will not, and will not permit any of its subsidiaries to, among other things, undertake certain customary corporate actions without written consent (not to be unreasonably withheld or delayed) of Wind Telecom and Weather II.
 
Under the terms of the Share Sale and Exchange Agreement, Wind Telecom and Weather II make substantially the same pre-closing covenants as to the conduct of business of the Wind Telecom group prior to Closing as VimpelCom makes with respect to the VimpelCom group (as summarized above). However, Wind Telecom’s conduct of business covenants do not apply to assets and liabilities associated with Wind Hellas and the assets that are being transferred to Weather II as part of the Spin-Off Plan.
 
Restrictions on Solicitation
 
Pursuant to the Share Sale and Exchange Agreement, from the Obligation Date until Closing VimpelCom covenants not to, and to not permit any of its officers, directors, affiliates, agents or representatives to, solicit, initiate, encourage, conduct or engage in any discussions, or enter into any agreement or understanding, with any other person or entity relating to the merger, business combinations, recapitalization or similar corporate event involving VimpelCom or any of its subsidiaries or relating to the sale of any of the shares or capital stock of VimpelCom or any of its subsidiaries or any material portion of the assets of VimpelCom or any of its subsidiaries. The same non-solicitation restrictions apply to Wind Telecom and Weather II with respect to the Wind Telecom group.
 
Shareholders Meeting
 
Pursuant to the Share Sale and Exchange Agreement, VimpelCom’s Supervisory Board is required to call a shareholders’ meeting to present to its shareholders the shareholder resolutions necessary under VimpelCom’s bye-


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laws and Bermuda law to approve the matters contemplated by the Share Sale and Exchange Agreement and recommend to VimpelCom shareholders that they vote in favour of those resolutions.
 
Agreements to Use Reasonable Best Efforts
 
Subject to the terms and conditions of the Share Sale and Exchange Agreement, the Share Sale and Exchange Agreement requires that each party cooperate and use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or advisable under the Share Sale and Exchange Agreement and applicable laws to consummate the transactions contemplated by the Share Sale and Exchange Agreement as promptly as practicable after the date of the Share Sale and Exchange Agreement.
 
Use of Retained Names and Marks
 
Under the Share Sale and Exchange Agreement, as promptly as reasonably practicably after Closing, VimpelCom must use its commercially reasonable efforts to change the names of businesses that are identified as retained names and marks under the Share Sale and Exchange Agreement, including “Orascom Telecom” and “Orcap”, or remove those names from the businesses conducted by Wind Telecom, subject to certain exceptions and rights to use such names for a specified period.
 
Listing
 
VimpelCom covenants to use its reasonable best efforts to cause its ADSs to remain listed on the NYSE or cause its common shares or other instruments representing its common shares to remain listed for a period of time on certain other exchanges, with certain exceptions.
 
Wind Telecom Investors and Minority Shareholders
 
Pursuant to the Share Sale and Exchange Agreement, from October 4, 2010 until the Obligation Date, Weather II is required to use its reasonable best efforts to cause the Wind Telecom Investors to either sell their shares to Weather II so that Weather II can sell them to VimpelCom pursuant to the Share Sale and Exchange Agreement or enter into joinder letters to become parties to the Share Sale and Exchange Agreement. Weather II is also required to use its commercially reasonable efforts to encourage the Wind Telecom Minority Shareholders to undertake the same actions as the Wind Telecom Investors.
 
Wind Hellas Spin-Off
 
The Share Sale and Exchange Agreement requires Wind Telecom and Weather II to use their reasonable best efforts to effect the Wind Hellas Spin-Off and the related termination of all intercompany agreements between the Wind Telecom group and Wind Hellas and its related companies. Completion of the Wind Hellas Spin-Off is also a condition to VimpelCom’s obligation to close the Transaction. See “The Share Sale and Exchange Agreement — Conditions to Closing”.
 
Fees and Expenses
 
Whether or not the transactions contemplated by the Share Sale and Exchange Agreement are consummated, all costs and expenses incurred in connection with the Transaction will be paid by the party incurring such expense.
 
Conditions to Closing
 
The respective obligation of each party to close the transactions contemplated by the Share Sale and Exchange Agreement is subject to the satisfaction or waiver of the following conditions:
 
  •  no governmental entity, court or arbitral tribunal will have enacted, promulgated, enforced or entered any statute, rule, regulation, injunction or other order that makes the transfer of the Wind Telecom Shares to VimpelCom, the issuance of VimpelCom common shares or VimpelCom convertible preferred shares or payment of the cash consideration to Weather II and the Wind Telecom Shareholders or the completion of the spin-off transactions pursuant to the Spin-Off Plan illegal or otherwise prohibiting such transfer and transactions;


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  •  all consents required under the competition and antitrust laws of Ukraine, Pakistan and Italy and the approval of the Pakistan Telecommunications Authority will have been obtained (including the termination of any applicable waiting periods) without material conditions or restrictions; and
 
  •  shareholder approval of the Share Issuance Proposal and the Authorized Share Capital Increase Proposal will have been obtained.
 
VimpelCom’s and Wind Telecom and Weather II’s respective obligations to close the transactions contemplated by the Share Sale and Exchange Agreement are also separately subject to the satisfaction or waiver of the following conditions:
 
  •  the actions and transactions to be completed before Closing as set out in the Refinancing Plan will have been completed and the actions required to be taken as of Closing for post-closing transactions will have been taken;
 
  •  the Ancillary Agreements that are to enter into effect at Closing will have been executed and delivered by each of the parties thereto.
 
VimpelCom’s respective obligation to close the transactions contemplated by the Share Sale and Exchange Agreement is also separately subject to the satisfaction or waiver of the following conditions, among others:
 
  •  the Wind Hellas Spin-Off will have been completed;
 
  •  at Closing, VimpelCom will receive (x) all of the Wind Telecom Shares held by Weather II and the Wind Telecom Shareholders and (y) all of the shares in Wind Telecom’s share capital held by Wind Telecom Investors as of October 4, 2010 and (ii) at or prior to Closing, each agreement between Wind Telecom or any of its subsidiaries and any of Weather II or any Wind Telecom Shareholder will have been terminated and settled;
 
  •  each Wind Telecom Investor that has not executed a joinder letter to become party to the Share Sale and Exchange Agreement will have granted the relevant waivers under any agreement between it and Wind Telecom or Weather II, and will have carried out such other actions as may reasonably be necessary to permit the consummation of the transactions contemplated by the Share Sale and Exchange Agreement to proceed without triggering or exercising any additional rights under such agreements.
 
Wind Telecom and Weather II’s obligation to close the transactions contemplated by the Share Sale and Exchange Agreement is also separately subject to the satisfaction or waiver of certain conditions, including, among others, that:
 
  •  each Wind Telecom Investor that has not executed a joinder letter to become part to the Share Sale and Exchange Agreement will have granted the relevant waivers under any agreement between it and Wind Telecom or Weather II, and will have carried out such other actions as may reasonably be necessary to permit the consummation of the transactions contemplated by the Share Sale and Exchange Agreement to proceed without triggering or exercising any additional rights under such agreements.
 
Indemnification
 
Indemnification by Weather II
 
Pursuant to the Share Sale and Exchange Agreement, following Closing Weather II will indemnify VimpelCom and its officers, directors, employees, agents, subsidiaries and affiliates from and against all losses arising out of or resulting from:
 
  •  any breach of any representation, warranty, covenant or obligation of Wind Telecom or Weather II, subject to certain exceptions;
 
  •  claims or residual liabilities related to Wind Telecom’s ownership of Wind Hellas prior to the completion of the Wind Hellas Spin-Off, the Wind Hellas Spin-Off, or claims relating to Wind Hellas after the Wind Hellas Spin-Off (the “Wind Hellas Indemnity”);
 
  •  the Spin-Off Assets to the extent such loss arises out of a situation existing, or an act or failure to act by Weather II or any member of the Wind Telecom group, prior to Closing, subject to certain limitations (the “Spin-Off Indemnity”);


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  •  any assessment of any deficiency in, or claim for, Italian withholding taxes made by the Italian taxing authority other than claims arising from specific notifications previously received from the Italian taxing authority (the “Italian Withholding Tax Indemnity”); See “Risk Factors Relating to Wind Telecom’s Business — Risks Relating to Wind Italy’s Business — Wind Italy is subject to an audit by the Italian Tax Authority regarding withholding taxes on certain interest payments” on Annex B.
 
  •  any guarantee VimpelCom is required to provide to any entity pursuant to the MobiNil Shareholders Agreement (the “MobiNil Indemnity”);
 
  •  claims brought by Qatar Telecom (Qtel) Q.S.C., any governmental entity or any third-party resulting from the sale of the OTH’s Tunisian assets, but only to the extent that such losses result from claims arising under any agreements not previously disclosed to VimpelCom prior to November 21, 2010, and together with the Wind Hellas Indemnity, the Spin-Off Indemnity, the Italian Withholding Tax Indemnity and the MobiNil Indemnity, the “Wind Telecom Specific Indemnities”).
 
Weather II will only be liable to pay an indemnity equal to 72.65% of the amount of any loss to be indemnified, such percentage being equal to its ownership interest in Wind Telecom.
 
Indemnification by the Wind Telecom Shareholders
 
Pursuant to the Share Sale and Exchange Agreement, following Closing each of the Wind Telecom Shareholders will severally, but not jointly, indemnify VimpelCom and its officers, directors, employees, agents, subsidiaries and affiliates from and against all losses arising out of or resulting from any breach of any representation, warranty, covenant or obligation by it, subject to certain exceptions.
 
Indemnification by VimpelCom
 
Pursuant to the Share Sale and Exchange Agreement, following Closing VimpelCom will indemnify Weather II and its officers, directors, employees, agents, subsidiaries and affiliates from and against all losses arising out of or resulting from:
 
  •  any breach of any representation, warranty, covenant or obligation of VimpelCom, subject to certain exceptions; and
 
  •  any decision by the Antimonopoly Committee of Ukraine having the effect or revoking, rescinding, cancelling or nullifying its March 2010 approval of the transaction through which Kyivstar became a subsidiary of VimpelCom and certain related matters (the “VimpelCom Specific Indemnity”);
 
Following Closing, VimpelCom will also indemnify each of the Wind Telecom Shareholders and its officers, directors, employees, agents, subsidiaries and affiliates from and against all losses arising out of or resulting from any breach of a representation or warranty made to the Wind Telecom Shareholders or any covenant or obligation of it to deliver validly issued VimpelCom common shares or convertible preferred shares pursuant to the Share Sale and Exchange Agreement.
 
Limitation on Indemnification
 
Under the terms of the Share Sale and Exchange Agreement, a party will not be under an obligation to indemnify another until losses incurred by such party exceed a US$50 million threshold. The US$50 million threshold does not apply to the following:
 
  •  claims for indemnification against Weather II or any Wind Telecom Shareholders for (i) breach of the title to shares representation, (ii) breaches of any covenant or obligation of Weather II or any Wind Telecom Shareholders or (iii) the Wind Telecom Specific Indemnities (the “Wind Indemnity Exclusions”);
 
  •  claims for indemnification against VimpelCom for (i) breaches of the share issuance representation, (ii) any covenant or obligation of VimpelCom or (iii) the VimpelCom Specific Indemnity (the “VimpelCom Exclusions”).


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None of Weather II or the Wind Telecom Shareholders will be required to indemnify VimpelCom for any losses in excess of 20% of the value of the consideration received by Weather II or such Wind Telecom Shareholders, other than with respect to the Wind Indemnity Exclusions, in which case indemnification is capped at 100% of the value of the consideration received by Weather II or such Wind Telecom Shareholder.
 
VimpelCom will not be required to indemnify Weather II or any Wind Telecom Shareholder for any losses in excess of 20% of the value of the consideration received by Weather II or such Wind Telecom Shareholders, other than with respect to the VimpelCom Indemnity Exclusions, in which case indemnification is capped at 100% of the value of the consideration received by Weather II or such Wind Telecom Shareholder. Any indemnifiable losses due to Weather or any Wind Telecom Shareholder will be multiplied by the quotient of 1/(1-X%), where X% is equal to Weather II’s or such Wind Telecom Shareholder’s share in the share capital of VimpelCom expressed as a percentage at the time the loss is incurred and only in relation to VimpelCom common shares received by Weather II or such Wind Telecom Shareholder at closing.
 
Termination of the Share Sale and Exchange Agreement
 
Events of Termination
 
The Share Sale and Exchange Agreement may be terminated, at any time prior to the Closing date,
 
  •  by mutual written consent of the boards of directors, or equivalent governing bodies, of Wind Telecom and VimpelCom;
 
  •  by either Wind Telecom or VimpelCom at any time on or prior to the date on which the proposals described in this proxy statement are approved by the VimpelCom shareholders;
 
  •  by either Wind Telecom or VimpelCom if Closing shall not have occurred on or prior to June 30, 2011; and
 
  •  by either Wind Telecom or VimpelCom if any governmental entity, court or arbitration tribunal has enacted, issued, promulgated, enforced, or entered any statute, rule, regulation, injunction or other order which is in effect and has the effect of making the transfer of the Wind Telecom Shares, the issuance of VimpelCom shares or payment of cash consideration to Weather II and the Wind Telecom Shareholders or completion of the spin-off transactions pursuant to the Spin-Off Plan illegal or otherwise prohibiting consummation of such transfers and transaction and such statute, rule, regulation, injunction or other order has become final and non-appealable.
 
The Share Sale and Exchange Agreement does not impose any break fees on the terminating party.
 
Effects of Termination
 
If either Wind Telecom or VimpelCom validly terminates the Share Sale and Exchange Agreement, the Share Sale and Exchange Agreement will terminate and have no further effect, except for certain provisions that survive such termination. Except with respect to termination by Wind Telecom or VimpelCom prior to the Obligation Date, no party shall be relieved or released from any liabilities or damages incurred or suffered by a party, to the extent such liabilities or damages were the result of fraud or wilful and material breach.
 
Amendments and Waivers
 
Any term of the Share Sale and Exchange Agreement may be amended only by an instrument in writing signed by the party against whom such amendment or waiver is sought to be enforced.
 
Governing Law
 
The Share Sale and Exchange Agreement is governed in all respects by the laws of the State of New York.
 
Arbitration
 
Any dispute arising under the Share Sale and Exchange Agreement will be settled by arbitration in London under the LCIA Rules. Each party submits to the non-exclusive jurisdiction of the Commercial Court in London,


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England in connection with any proceedings for confirmation or enforcement of an arbitration award and the exclusive jurisdiction of the Commercial Court in London, England in connection with any application for interim, provisional or conservatory measures in connection with arbitration or an action to compel arbitration.
 
Original Agreement
 
As of January 17, 2011, the date of the Share Sale and Exchange Agreement, the Original Agreement is terminated and replaced in its entirety by the Share Sale and Exchange Agreement.
 
THE REFINANCING PLAN
 
The Refinancing Plan agreed pursuant to the Share Sale and Exchange Agreement provides for the financings necessary to complete the Transaction. The Refinancing Plan provides for (1) financings by VimpelCom entities to fund the cash consideration for the Transaction, refinance indebtedness of entities associated with OTH and pay costs of the Transaction and related financings, (2) financings by Wind Telecom entities to refinance indebtedness which would otherwise have been subject to repayment due to a change of control when the Transaction is completed and, at the same time, to extend the maturity profile and reduce average financing costs, and (3) consents and waivers to be obtained by Wind Telecom entities to address the change of control and other covenant issues.
 
Financings by VimpelCom
 
VimpelCom expects to raise the funds necessary to finance the Transaction pursuant to the Refinancing Plan.
 
Sources and Uses of Funds
 
We estimate that the total amount of funds necessary to complete the Transaction and the related transactions and financings, including the payment of related fees and expenses, will be approximately US$5.3 billion, which includes approximately US$1.495 billion to pay the cash portion of the purchase consideration, approximately US$300 million to be paid to Wind Italy under the Spin-Off Plan in connection with the transfer of certain Wind Italy assets (the “Wind Italy Spin-Off”), approximately US$125 million in transaction costs and approximately US$3.38 billion necessary to complete the refinancing of indebtedness of entities associated with OTH after taking into account the application of US$658 million from the proceeds of OTH’s sale of Orascom Telecom Tunisia to repay a portion of that indebtedness. If the transfer under the Spin-Off Plan of certain assets associated with OTH (the “OTH Spin-Off”) cannot be effected, we would be required to pay an additional amount of up to US$770 million (the “Additional OTH Spin-Off Payment”), which we expect would be paid with proceeds from current funding arrangements. The Additional OTH Spin-Off Payment, if required, consists of an initial payment of US$600 million and a possible second, subsequent payment of US$170 million. If the Wind Italy Spin-Off cannot be effected, we would pay US$100 million instead of the approximately US$300 million, which would reduce our funding needs by US$200 million. The US$300 million for the Wind Italy Spin-Off will be paid to Wind Italy and retained by it in the Wind Italy business. The US$100 million to be paid if the Wind Italy Spin-Off cannot be effected will be paid to Weather II and therefore will not remain in the Wind Italy business, since the assets subject to the Wind Italy Spin-Off will in that case remain in the business. For more information about the Spin-Off Plan, see the section of this proxy statement entitled “The Spin-Off Plan”.
 
We currently have funding arrangements in place for borrowing up to US$6.5 billion through a bridge loan facility and a term loan, although we currently expect borrowing to be approximately US$5.3 billion, which is US$1.2 billion less than the total of these two borrowing arrangements. In addition, our wholly owned subsidiary, OJSC VimpelCom, recently borrowed from VIP Finance Ireland Limited the US$1.5 billion proceeds from its offering of loan participation notes. These proceeds are for the general corporate purposes of OJSC VimpelCom or for it to lend all or part to VimpelCom or one of its wholly owned subsidiaries to be used for its general corporate purposes, including refinancing of debt associated with OTH. The bridge facility, term loan and loan participation note issuance are each discussed below under “— VimpelCom Financing Sources”.


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The expected sources and uses of funds to be used in connection with the Transaction and related financings are as follows:
 
                     
Sources
  In millions    
Uses
  In millions  
 
Bridge loan to a VimpelCom entity
  US$ 1,300 1   Cash consideration   US$ 1,495  
Sberbank term loan to OJSC VimpelCom
  US$ 2,500 2   Wind Italy Spin-Off   US$ 300  
Proceeds from loan participation notes loaned to OJSC VimpelCom
  US$ 1,500     Refinancing the indebtedness of Weather Capital Special Purpose 1 S.A.   US$ 607 3
            Refinancing the indebtedness from OTH bank loan and redeem high yield notes and equity linked notes   US$ 2,773  
            Banking and transaction costs   US$ 125  
                     
    US$ 5,300         US$ 5,300  
 
The sources and uses information set forth above assumes, among other things, that (1) the Spin-Off Plan will be carried out, (2) we therefore will not be required to pay shareholders of Wind Telecom the Additional OTH Spin-Off Payment, which becomes due if the OTH Spin-Off cannot be effected, and (3) we will redeem, at Closing of the Transaction, the US$750 million aggregate principal amount of senior unsecured notes issued by Orascom Telecom Finance S.A. (the “Orascom High Yield Notes”) at the voluntary redemption premium of 104% for a redemption cost of US$780 million. If the OTH Spin-Off is not carried out, we have funding arrangements in place that are sufficient for us to pay the Additional OTH Spin-Off Payment plus all other amounts included under “Uses” above. In that event, however, we would only be required to redeem the Orascom High Yield Notes if their rating is downgraded within ninety days after completion of the Transaction. If such a ratings downgrade occurs, we would be required to redeem the Orascom High Yield Notes at a lower mandatory redemption premium of 101% for a redemption cost of US$758 million. If such a ratings downgrade does not occur, we would not be required to redeem the Orascom High Yield Notes and therefore the required “Uses” would be reduced by the assumed US$780 million redemption of those notes. As noted above, in the event the Wind Italy Spin-Off cannot be effected, we would pay US$100 million to Weather II instead of the US$300 million to Wind Italy that is set out in the “Uses” above. This would reduce our funding needs by US$200 million.
 
VimpelCom Financing Sources
 
The funds raised by VimpelCom pursuant to the Refinancing Plan are expected to come from the proceeds of a bridge loan facility from a group of international banks, the proceeds of the loan participation notes loaned to OJSC VimpelCom and a term loan facility from OAO Sberbank of Russia (“Sberbank”). The proceeds of amounts borrowed through these arrangements will be made available to the appropriate entities for the uses described above through intercompany loans. These financings are described below.
 
Bridge Loan.  On December 3, 2010, VimpelCom entered into a mandate letter agreement with six international banks pursuant to which the banks agreed to, subject to certain conditions, loan VimpelCom or one of its affiliates up to US$4.0 billion upon the execution of a bridge loan agreement (the “Bridge Loan”). The six banks, which VimpelCom appointed as mandated lead arrangers for the Bridge Loan, are Barclays Capital, BNP Paribas, Citibank N.A., London Branch, The Royal Bank of Scotland N.V., ING Bank N.V., and HSBC Bank plc.
 
 
1 The current funding arrangement under the bridge loan is for up to US$4.0 billion. For more information about the bridge loan, see “— VimpelCom Financing Sources — Bridge Loan” below.
2 The current funding arrangement under the Sberbank term loan is for up to US$2.5 billion. The amounts shown as borrowed under the bridge loan and the Sberbank term loan are illustrative. The actual allocation between the bridge loan and the Sberbank term loan will be made at the completion of the Transaction based upon market conditions and considerations of overall cost, as determined then by VimpelCom. For more information about the Sberbank term loan, see “— VimpelCom Financing Sources — Sberbank Term Loan” below.
3 This represents the US$ equivalent to the amount expected to be required to repay the financing to be entered into by Weather Capital Special Purpose 1 S.A. to refinance the WCSP1 Margin Loan, as described in “VimpelCom Financing Sources — Intercompany Loans”. The US$ equivalent is calculated at the US$/Euro exchange rate as of September 30, 2010, which is assumed to be US$1.36 to €1.00, consistent with Note 2 to our Unaudited Pro Forma Condensed Combined Financial Information.


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The Bridge Loan may be repaid with proceeds from the issuance of bonds (or loan participation notes) with the mandated lead arrangers acting as joint lead managers or through other means. Under the terms of the Bridge Loan, VimpelCom’s wholly owned subsidiary, OJSC VimpelCom, must either be the borrower or must guarantee the obligations of the borrower. We expect that the borrower will be either VimpelCom or its subsidiary VimpelCom Amsterdam B.V. Key terms of the Bridge Loan will include the following:
 
     
Maturity:
  12 months with 6-month extension option
Interest rate:
  Escalating from 0.85% over LIBOR for the first 3 months to 3% over LIBOR from 12-18 months
 
The amount of the Bridge Loan is a maximum of US$4.0 billion. The actual drawdown will be determined based on the precise funding requirements for the Transaction, including funding requirements if we are required to pay the Additional OTH Spin-Off Payment.
 
Loan Participation Notes.  On February 2, 2011, VIP Finance Ireland Limited issued loan participation notes in two tranches totalling US$1.5 billion, consisting of “A Notes” in the amount of US$500 million and “B Notes” in the amount of US$1.0 billion. Each series of notes has a different maturity and interest rate. VIP Finance Ireland Limited loaned the proceeds of the loan participation notes to OJSC VimpelCom, which has agreed to repay the loan in amounts sufficient to repay the notes. OJSC VimpelCom expects to distribute the proceeds of the loan to VimpelCom through intercompany loans. For more information about expected intercompany loans, see “— Intercompany Loans” below. Key terms of the A Notes and the B Notes include the following:
 
     
Maturity for A Notes:
  February 2, 2016
Interest rate for A Notes:
  6.493%
Maturity for B Notes:
  February 2, 2021
Interest rate for B Notes:
  7.748%
 
Sberbank Term Loan.  OJSC VimpelCom has arranged with Sberbank for a term loan up to US$2.5 billion to be advanced in RUB at the RUB/US$ exchange rate of the Central Bank of Russia on the date the loan is advanced (the “Sberbank Loan”). The borrower under the Sberbank Loan will be OJSC VimpelCom. Key terms are expected to include the following:
 
     
Repayment/maturity:
  Repayments in 8 equal semiannual installments starting 3 years after closing and continuing through 7th anniversary of closing
Interest rate:
  9.0% or 9.5% depending on level of OJSC VimpelCom deposit account activity
 
Intercompany Loans.  To effect the financing required for the Transaction, OJSC VimpelCom intends to provide funds to VimpelCom or its subsidiaries through intercompany loans of the proceeds from the Sberbank Loan and the proceeds it received from the February 2, 2011 issuance of loan participation notes by VIP Finance Ireland Limited. The proceeds from the Bridge Loan will be loaned to VimpelCom or another VimpelCom entity, as required, through an intercompany loan from the VimpelCom entity that is the borrower under the Bridge Loan. VimpelCom, in turn, intends to make or cause its affiliates to make intercompany loans to entities acquired in the Transaction to refinance indebtedness which will become due as a result of the change of control of such entities upon completion of the Transaction. The total amount of indebtedness expected to be refinanced with intercompany loans is approximately US$3.38 billion, which is the estimated amount required after taking into account the application of US$658 million of the proceeds from OTH’s sale of Orascom Telecom Tunisia to pay down approximately US$600 million of OTH’s senior bank indebtedness and US$58 million of equity-linked notes of Orascom Telecom Oscar S.A. The debt to be paid with intercompany loans is described as follows:
 
  •  €446 million to repay and refinance the outstanding balance of the new financing to be put in place by Wind Telecom before completion of the Transaction to refinance the original €1.2 billion aggregate principal amount of guaranteed collateralized notes due April 4, 2011, issued by Weather Capital Special Purpose 1 S.A. (as described below).
 
  •  US$1.75 billion to repay and refinance the outstanding balance of the original US$2.5 billion credit facility of OTH.


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  •  US$780 million to redeem and refinance the Orascom Telecom High Yield Notes.
 
  •  US$243 million to redeem and refinance the original US$230 million aggregate principal amount of secured equity linked notes due 2013 issued by Orascom Telecom Oscar S.A.
 
The Wind Telecom entity financings described above have maturity dates that permit them to be refinanced with the intercompany loans to be funded by VimpelCom upon Closing of the Transaction, except for the Weather Capital Special Purpose 1 S.A. financing (secured by global depositary securities of OTH) (the “WCSP1 Margin Loan”), which matures on April 4, 2011. We and Wind Telecom anticipate that the Transaction will be completed after the WCSP1 Margin Loan matures. Accordingly, on February 4, 2011, certain Wind Telecom entities entered into a letter agreement with four banks pursuant to which the banks agreed to enter into a bridge loan facility to refinance the WCSP1 Margin Loan. The new bridge loan facility would mature on December 15, 2011, although the lenders have the right to demand that the borrower issue or cause to be issued securities prior to that date for the purpose of taking out the bridge loan. VimpelCom intends to refinance this bridge loan facility by an intercompany loan, made at the time the Transaction is completed and before the new bridge loan matures on December 15, 2011. VimpelCom may not be able to refinance the bridge loan and may incur additional costs because of securities issued to take out the bridge loan (1) if the VimpelCom shareholders do not approve the Share Issuance Proposal or the Authorized Share Capital Increase Proposal prior to April 28, 2011, or (2) if the VimpelCom Shareholders do approve the Share Issuance Proposal or the Authorized Share Capital Increase Proposal but the Transaction is not then completed by June 15, 2011.
 
The terms and structures for the intercompany loans which will be made to effect the refinancings in connection with the Transaction will be determined by VimpelCom based on factors which will include, among other things, tax considerations, covenants in financings which will remain outstanding and funds available for repayment. The Refinancing Plan requires that shareholders of OTH approve the terms for the intercompany loans to refinance the debt of OTH, Orascom Telecom Finance S.C.A. and Orascom Telecom Oscar S.A. Under the OTH Spin-Off Plan, shareholders of OTH will be required to vote on, among other things, (1) these intercompany loans as related party transactions, in an Ordinary General Meeting, and (2) an increase in authorized capital and other matters associated with the OTH Spin-Off, in an Extraordinary General Meeting. These meetings are to be held on the same day and approval by shareholders of OTH at both is required for making the intercompany loans.
 
Financings by Wind Telecom
 
Pursuant to the Refinancing Plan, in November 2010 Wind Telecom refinanced and modified indebtedness of Wind Telecom entities associated with Wind Italy. The refinancing was implemented to extend the debt maturity profile for the Wind Italy entities, reduce the overall running average cost of indebtedness for the Wind Italy entities and achieve more favorable and less restrictive covenants.
 
Wind Italy Group Indebtedness Before Refinancing
 
Prior to the refinancing effected pursuant to the Refinancing Plan, the outstanding indebtedness of the Wind Italy companies (the “Wind Italy Group Indebtedness”) primarily consisted of indebtedness under the following:
 
  •  Bank financings represented by the following facilities:
 
  •  €825 million term loan facility maturing in May 2012 (the “2012 Term Loan”);
 
  •  €1.466 billion term loan facility and a US$56 million term loan facility maturing in May 2013 (the “2013 Term Loan”);
 
  •  €1.466 billion term loan facility and a US$56 million term loan facility maturing in May 2014 (the “2014 Term Loan”); and
 
  •  €400 million revolving credit facility.
 
  •  €552 million aggregate principal amount of variable interest second lien notes due November 2014 and US$180 million aggregate principal amount of variable interest second lien notes due November 2014 (the “Second Lien Notes”);


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  •  €950 million aggregate principal amount of 11% senior notes due December 2015 and US$650 million aggregate principal amount of 12% senior notes due December 2015 (the “2015 Notes”);
 
  •  €1.25 billion aggregate principal amount of 113/4% senior notes due July 2017 and US$2.0 billion aggregate principal amount of 113/4% senior notes due July 2017 (the “2017 Notes”); and
 
  •  €325 million aggregate principal amount of 121/4% PIK notes due July 2017 and US$625 million aggregate principal amount of 121/4% PIK notes due July 2017 (the “PIK Notes”), issued by WAHF, the parent company of Wind Italy.
 
Wind Italy Group Indebtedness Pursuant to the Refinancing Plan
 
In November 2010 Wind Italy restructured and refinanced the Wind Italy Group Indebtedness, other than the 2017 Notes and the PIK Notes. To achieve this, Wind Italy and associated companies entered into two new term loan facilities and a revolving credit facility and issued two series of senior secured notes. The Wind Italy Group Indebtedness is paid from cash flow generated by Wind Italy businesses, and VimpelCom has no obligations for any payments on any Wind Italy Group Indebtedness. The restructured and refinanced Wind Italy Group Indebtedness is described in more detail as follows:
 
New Senior Secured Credit Facilities. On November 24, 2010, Wind Italy entered into two senior secured term loan facilities (the “New Senior Secured Credit Facilities”) consisting of a €1.515 billion term loan facility maturing November 2016 and a €2.015 billion term loan facility maturing November 2017. Wind Telecom also entered into a €400 million revolving credit facility maturing November 2016 which remained undrawn as of December 31, 2010 (the “New Revolving Credit Facility”).
 
The New Senior Secured Credit Facilities contain covenant packages which allow, among other things, dividend payments under more favorable terms and a specified reduction in interest if an investment grade rating is achieved by the borrower independently or in connection with a guarantee by VimpelCom.
 
New Senior Secured Notes. On November 26, 2010, Wind Acquisition Finance S.A. issued senior secured notes due February 2018 (the “New Senior Secured Notes”). The New Senior Secured Notes were issued in two tranches consisting of a 73/8% €1.75 billion tranche and a 71/4% US$1.3 billion tranche.
 
Refinancing Prior Debt. Wind Italy companies used the net proceeds from the New Senior Secured Credit Facilities and the New Senior Secured Notes to repay outstanding amounts under the 2012 Term Loan, the 2013 Term Loan and the 2014 Term Loan and prepay aggregate principal outstanding amounts of the Second Lien Notes and the 2015 Notes. The 2017 Notes and the PIK Notes remain outstanding. Accordingly, following the completion of its plan to refinance certain indebtedness pursuant to the Refinancing Plan, the indebtedness of Wind Telecom primarily consists of indebtedness under the New Senior Secured Credit Facilities, the New Senior Secured Notes, the 2017 Notes and the PIK Notes. As of December 31, 2010, Wind Telecom had undrawn availability under the New Revolving Credit Facility. For more information about the refinancing of the Wind Italy Group Indebtedness, see Note 5 to our Unaudited Pro Forma Condensed Combined Financial Information.
 
Consents and Waivers Obtained by Wind Telecom Entities and OTH
 
Entities associated with WAHF and Wind Italy have obtained consents and waivers from holders of outstanding indebtedness to the change of control to be effected by the Transaction and for other purposes, and OTH has obtained consents and waivers from holders of outstanding indebtedness to payment of debt and to address potential events of default.
 
Consents of Holders of Notes of Wind Italy Entities
 
Covenants contained in the instruments governing the 2015 Notes, the 2017 Notes and the PIK Notes required the issuer of the notes to make an offer to repurchase such notes at a purchase price of 101% upon the occurrence of a change of control (a “Repurchase Offer”). On November 4, 2010, pursuant to the Refinancing Plan, the issuers of notes guaranteed by Wind Italy and WAHF (Wind Acquisition Finance S.A. as issuer of the 2015 Notes and the 2017 Notes and Wind Acquisition Holdings Finance S.A. as issuer of the PIK Notes) requested that the holders of


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the 2015 Notes, the 2017 Notes and the PIK Notes consent to, among other things, consummation of the Transaction without receiving a Repurchase Offer. In November 2010, Wind Acquisition Finance S.A. received the requested consent from the holders of the 2015 Notes and the 2017 Notes, and Wind Acquisition Holdings Finance S.A. received the requested consent from the holders of the PIK Notes. As noted above, the 2015 Notes have been repaid, but the 2017 Notes and the PIK Notes remain outstanding.
 
Consents of Holders of OTH Debt
 
By waiver request letter dated November 15, 2010, as supplemented by waiver request letter dated November 26, 2010, OTH requested consents and waivers under its senior bank credit agreement dated February 27, 2006, as amended, for loans in the original aggregate principal amount of US$2.5 billion (the “OTH Bank Credit Agreement”), which will be refinanced through intercompany loans funded by VimpelCom at Closing of the Transaction. These consents and waivers were obtained and became effective in January 2011. They primarily relate to the OTH business in Algeria and the application of proceeds of the sale of the OTH business in Tunisia, and included, among other things, the following terms:
 
  •  Lenders under the OTH Bank Credit Agreement waived certain representations and warranties, breaches of covenants and other defaults under the OTH Bank Credit Agreement resulting from litigation, expropriation or other events relating to OTA and involving the Government of the Republic of Algeria or any governmental body thereof.
 
  •  OTH agreed to modifications to certain financial covenants in the event OTH ceases to hold more than 50% of the outstanding share capital of OTA.
 
  •  OTH agreed to deposit, and has deposited, US$730 million in proceeds from the sale of its Tunisian subsidiary into a blocked account (the “OTA Blocked Account”) with US$600 million applied to reduce the debt under the OTH Bank Credit Agreement, and the remaining US$130 million to be used to pay interest amounts due under the OTH Bank Credit Agreement as they come due.
 
  •  OTH agreed to apply, and has applied, US$58 million in proceeds from the sale of its Tunisian subsidiary to repay a portion of the US$230 million aggregate principal amount of secured equity linked notes due 2013 issued by Orascom Telecom Oscar SA.
 
  •  OTH agreed to deposit into the OTA Blocked Account for the payment of indebtedness under the OTH Bank Credit Agreement 100% of the net proceeds from any sale of shares in OTA, ECMS or MobiNil, and 75% of the net proceeds from the sale of any other material subsidiary.
 
  •  OTH is limited to US$25 million annually for dividend payments and other restricted payments.
 
The indebtedness of subsidiaries of OTH does not contain change of control covenants that would be triggered upon completion of the Transaction. Accordingly, we expect that all such indebtedness will remain in place without modification after completion of the Transaction.
 
Consent of Holders of WCSP1 Margin Loan
 
The WCSP1 Margin Loan has been modified and supplemented from time to time, most recently as of January 28, 2011. The January 28, 2011 amendment extended the deadline for the issuer to take certain actions toward refinancing the WCSP1 Margin Loan to the final maturity date of April 4, 2011, from January 31, 2011. For more information on the WCSP1 Margin Loan, see “— VimpelCom Financing Sources — Intercompany Loans”.
 
THE SPIN-OFF PLAN
 
As part of the Transaction consideration and as summarized in more detail below, VimpelCom and Weather II have agreed to the Spin-Off Plan which provides that shortly after Closing of the Transaction certain assets held under OTH and certain assets held under Wind Italy will be demerged from the Wind Telecom group and transferred back to Weather II. VimpelCom views these assets as having limited or no strategic value for the VimpelCom group. The assets are listed in detail below and generally include Wind Telecom group’s direct and indirect


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minority interest in ECMS, the group’s operations in North Korea, the Italian wholesale business, various Internet portals in Italy and Egypt and a number of under-sea cable companies. The Spin-Off Plan also provides for alternative cash payments from VimpelCom to Weather II in lieu of the demergers in the event the demergers cannot be completed. The Spin-Off Plan consists of the OTH Spin-Off Plan (with respect to the assets held under OTH) and the Wind Italy Spin-Off Plan (with respect to the assets held under Wind Italy).
 
OTH Spin-Off Plan
 
     
     
(FLOW CHART)   (FLOW CHART)
 
References in this proxy statement to “OTH Spin-Off Assets” are to each of the following assets of OTH:
 
  •  28.755% ownership stake in MobiNil;
 
  •  20.00% ownership stake in ECMS;
 
  •  95% ownership stake in Orabank NK (North Korea);
 
  •  75% ownership stake in CHEO Technology Joint Venture company (Koryolink) (DPRK), together with all other assets and businesses located in North Korea;
 
  •  100% direct and indirectly held ownership stake in Middle East and North Africa for Sea Cables (Free Zone II);
 
  •  51% ownership stake in Trans World Associate (Private) Limited (Pakistan);
 
  •  100% ownership stake in Med Cable Limited (UK);
 
  •  99.99% ownership stake in Intouch Communication Services S.A.E. (Egypt) (“Intouch”) (a/k/a the OT Ventures Internet portals and other ventures in Egypt including Link Development, ARPU+ Telecommunications Services S.A.E. (“ARPU+”) and LINKonLINE); and
 
  •  1% ownership stake in ARPU for Telecommunication Services S.A.E. (Egypt).
 
The OTH Spin-Off Assets will be first transferred to the existing shareholders of OTH by way of a legal demerger under Egyptian law whereby OTH is essentially split into two companies with the exact same shareholders. One company will hold the core assets to be retained by the Wind Telecom group and one company will hold the OTH Spin-Off Assets. Following this demerger, the shares held by the Wind Telecom group in the company holding the OTH Spin-Off Assets will be transferred to a subsidiary of Weather II. The demerger and transfer are both expected to occur the business day immediately following the Closing of the Transaction and are subject to the following conditions: (i) approval by the shareholders of OTH and (ii) approval by the Egyptian


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Financial Supervisory Authority (“EFSA”). EFSA is expected to pre-approve the demerger soon after the OTH shareholders meeting required to implement the demerger.
 
If the OTH shareholders’ meeting required to implement the demerger of the OTH Spin-Off Assets has failed to approve, or EFSA has failed to pre-approve, the demerger with respect to the OTH Spin-Off Assets on or prior to Closing of the Transaction, then the following will occur:
 
  •  all OTH Spin-Off Assets will be retained by VimpelCom;
 
  •  on the Closing date of the Transaction, VimpelCom will make a cash payment to Weather II of US$600 million as additional consideration; and
 
  •  if France Telecom’s call option contained in the amended and restated shareholders agreement among OTH, France Telecom, Wirefree Services Belgium, Atlas Services Belgium and MobiNil (the “MobiNil Shareholders Agreement”) has not been exercised within the first 120 “business days” (as defined in the MobiNil Shareholders Agreement) following the Closing date of the Transaction, VimpelCom will make an additional cash payment of US$170 million as further additional consideration on the 121st “business day” (as defined in the MobiNil Shareholders Agreement) following the Closing date of the Transaction.
 
However, if the OTH shareholders’ meeting required to implement the demerger has approved, and EFSA has pre-approved, the demerger with respect to the OTH Spin-Off Assets on or prior to Closing of the Transaction, but the demerger with respect to the OTH Spin-Off Assets cannot be completed on or prior to December 31, 2011 or such earlier date as agreed by VimpelCom and Weather II (the “Spin-Off Plan Outside Date”), then the following will occur:
 
  •  all OTH Spin-Off Assets shall be retained by VimpelCom;
 
  •  on the Spin-Off Plan Outside Date, VimpelCom will make a cash payment to Weather II of US$600 million as additional consideration; and,
 
  •  if France Telecom’s call option under the MobiNil Shareholders Agreement has been not exercised within the first 120 “business days” (as defined in the MobiNil Shareholders Agreement) following the Closing date of the Transaction, VimpelCom shall make a further additional cash payment of US$170 million as further additional consideration on the later to occur of (A) the 121st “business day” (as defined in the MobiNil Shareholders Agreement) following the Closing date of the Transaction and (B) the Spin-Off Plan Outside Date.


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Wind Italy Spin-Off Plan
 
     
(FLOW CHART)   (FLOW CHART)
 
 
References in this proxy statement to “Wind Italy Spin-Off Assets” are to each of the following assets of Wind Italy:
 
  •  100% ownership stake in WIS;
 
  •  100% ownership stake in ITNET S.r.l.;
 
  •  100% of the business formerly owned by Italia Online S.r.l. before its merger into Wind Italy, together with all other assets (including intellectual property) and personnel (including the dedicated sales forces) owned or employed by Wind associated with the Libero portal business; and
 
  •  The Italy-Greece Medcable submarine cable located between Otranto, Italy and Aethos, Greece, asset owned by Wind Italy.
 
On the same day as, but immediately after, the Closing of the Transaction, the Wind Italy Spin-Off Assets are contemplated to be spun-off to a newly established entity (“NewCo”) initially controlled by Wind Italy. Immediately thereafter and on the same day as of the Closing of the Transaction, Wind Italy will transfer its ownership in NewCo to VimpelCom in exchange for a cash payment to Wind Italy based on the fair market value of NewCo, which the parties expect will not exceed US$300 million. Immediately thereafter and on the same day as the Closing of the Transaction, VimpelCom will transfer its ownership in NewCo to Weather II.
 
If the spin-off of the Wind Italy Spin-Off Assets cannot be completed on or prior to the Spin-Off Plan Outside Date, then, all Wind Italy Spin-Off Assets will be retained by VimpelCom following the Closing of the Transaction, and VimpelCom will make a cash payment of US$100 million as additional consideration on the Spin-Off Plan Outside Date.
 
MOBINIL/ECMS PLAN
 
In connection with the Transaction, VimpelCom and each of Wind Telecom, Weather II and OTH have agreed a plan setting forth the actions that the parties have agreed to take relating to OTH’s interests in MobiNil and ECMS under the MobiNil Shareholders Agreement (the “MobiNil/ECMS Plan”). Under the MobiNil Shareholders Agreement, France Telecom has a call option over OTH’s shares in MobiNil in the event of a “change of control” with respect to OTH as defined in the MobiNil Shareholders Agreement (the “FT Call Option”). The purpose of the MobiNil/ECMS plan is to cause OTH’s interests in MobiNil and ECMS to remain at all times under the control of Weather II (and hence the Sawiris Family), throughout the spin-off of OTH’s interests in MobiNil and ECMS pursuant to the Spin-Off Plan, and, therefore,


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that the Closing of the Transaction shall not represent a “change of control” with respect to OTH within the meaning of the MobiNil Shareholders Agreement. Under the Share Sale and Exchange Agreement, Wind Telecom, Weather II and VimpelCom must use their reasonable best efforts to effect at or prior to Closing the actions required to be effected at or prior to Closing, and after Closing the actions required to be effected after Closing, under MobiNil/ECMS Plan.
 
ANCILLARY AGREEMENTS
 
At Closing, the parties will enter into each of the Ancillary Agreements which are summarized below.
 
Interim Control Agreement
 
OTH, Weather II, Wind Telecom and VimpelCom will enter into the Interim Control Agreement, which contains the MobiNil/ECMS Plan and will govern the parties’ rights and obligations relating to OTH’s interests in MobiNil and ECMS. The purpose of the Interim Control Agreement is to ensure that Weather II remains in control of the OTH Spin-Off Assets at all times prior to completion of the OTH Spin-Off pursuant to the Spin-Off Plan. See “The Spin-Off Plan”.
 
Lock-Up Agreement
 
Weather II and VimpelCom will enter into the Lock-Up Agreement, pursuant to which Weather II will agree not to transfer any of the VimpelCom common shares it receives at Closing for a period of six months following Closing. These restrictions are subject to certain exceptions, including, among others, transfers to controlled affiliates of Weather II and related entities, pledges and other customary exceptions. Weather II also agrees that for 18 months and such additional period of time as claims remain outstanding under the Share Sale and Exchange Agreement, the Interim Control Agreement or the Algerian Value Sharing Agreement, Weather II will not transfer or pledge any of the shares that are required to be placed in an escrow account pursuant to the Share Escrow Agreement, subject to Weather II’s ability to substitute such shares with certain other assets.
 
Share Escrow Agreement
 
Weather II and VimpelCom will enter into the Share Escrow Agreement, pursuant to which Weather II will agree to deposit 20% of the VimpelCom common shares being delivered to Weather II at Closing under the Share Sale and Exchange Agreement in an escrow account maintained by Citibank N.A. as escrow agent. The VimpelCom common shares, or such assets that Weather substitutes for the VimpelCom common shares, subject to VimpelCom’s consent in the case of certain proposed substitute assets, will remain in the escrow account until the escrowed property may be released in accordance with the terms of the Share Escrow Agreement.
 
Weather II Registration Rights Agreement
 
Weather II and VimpelCom will enter into the Weather II Registration Rights Agreement, pursuant to which Weather II will receive certain registration rights similar to those that Altimo and Telenor have under a registration rights agreement among VimpelCom and certain Telenor and Altimo parties. See “Risk Factors — Risk Factors Relating to the Transaction — The issuance of a significant number of VimpelCom Shares and a resulting “market overhang” could adversely affect the market price of VimpelCom ADSs after completion of the Transaction”.
 
WIS Framework Agreement
 
Weather II, Wind Telecom, WIS and VimpelCom will enter into the WIS Framework Agreement, which contains the terms and conditions under which certain service agreements between WIS, which is being transferred to Weather II as part of the Spin-Off Plan, and subsidiaries of Wind Telecom will continue in effect for the 18-month term following Closing under the Share Sale and Exchange Agreement, subject to termination on 60 days notice by the relevant Wind Telecom client if certain price and quality standards are not met.


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Algerian Value Sharing Agreement
 
Weather II and VimpelCom will enter into the Algerian Value Sharing Agreement, which is described under “The Transaction — Algerian Value Sharing Arrangement”.
 
OTH Separation Agreement
 
OTH, Weather II, Wind Telecom and VimpelCom will enter into the OTH Separation Agreement, pursuant to which the parties will agree to the allocation of certain assets and for the continuation or separation of certain commercial and operational interdependencies between OTH and the new entity demerged from OTH following the demerger pursuant to the OTH Spin-Off Plan.
 
Wind Separation Agreement
 
Wind Italy, Weather II, Wind Telecom and VimpelCom will enter into the Wind Separation Agreement, pursuant to which the parties will agree to the allocation of certain assets and for the continuation or separation of certain commercial and operational interdependencies between Wind Italy and the new entity into which the Wind Italy Spin-Off Assets will be contributed pursuant to the Wind Italy Spin-Off Plan.
 
REGULATORY MATTERS
 
Subject to the terms and conditions of the Share Sale and Exchange Agreement, each party has agreed to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under the Share Sale and Exchange Agreement and applicable laws to complete the transactions contemplated by the Share Sale and Exchange Agreement, including obtaining the requisite regulatory approvals, as promptly as practicable after the date of the Share Sale and Exchange Agreement as discussed in “The Share Sale and Exchange Agreement — Agreements to Use Reasonable Best Efforts”.
 
As a condition to Closing under the Share Sale and Exchange Agreement, the parties are required to obtain all consents required under the competition and antitrust laws of Ukraine, Italy and Pakistan and under the telecommunication laws of Pakistan.
 
Ukraine
 
In Ukraine, the Transaction is subject to the approval of the Antimonopoly Committee of Ukraine (“AMC”). On January 28, 2011, an application for approval of the AMC was filed.
 
Italy
 
In Italy, the Transaction is subject to the approval of the Italian Antitrust Authority (“IAA”). On January 27, 2011, an application for approval of the IAA was filed. Although not a condition to Closing, the approvals of the Italian Ministry of Communications (“IMC”) and the Italian National Regulatory Authority (“INRA”) are also required. On January 27, 2011, applications for approval of the IMC and the INRA were filed.
 
Pakistan
 
In Pakistan, the Transaction is subject to the approval of the Competition Commission of Pakistan (“CCP”) and the Pakistan Telecommunications Authority (“PTA”). On January 28, 2011, an application for approval of the CCP was filed. On February 2, 2011, an application for approval of the PTA was filed.
 
DESCRIPTION OF THE BUSINESS OF WIND TELECOM
 
Wind Telecom is an international provider of mobile and fixed-line telecommunications and Internet services with operations in Europe (primarily, Italy), North America, Africa, the Middle East and Asia. As of September 30, 2010, Wind Telecom’s wholly owned or jointly controlled businesses had in the aggregate approximately 117 million subscribers (excluding operations in Tunisia and Greece, which have been divested since such date),


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of which approximately 28.7 million were associated with the Wind Italy Spin-Off Assets or the OTH Spin-Off Assets.
 
The Wind Telecom group operates in the telecommunications sector through two main operating sub-groups:
 
  •  WAHF and its subsidiaries (the “Wind Italy Group”); and
 
  •  OTH and its subsidiaries (the “OTH Group”).
 
At or after Closing, Wind Telecom’s interests in the Wind Italy Spin-Off Assets and the OTH Spin-Off Assets will be transferred to Weather II and will therefore no longer be part of the combined company following their transfer. If such transfers cannot be effected, Wind Telecom will retain those assets, and VimpelCom will make certain cash payments to Weather II as described in “The Spin-Off Plan”.
 
The charts below set out the structure of the Wind Telecom group and its two main operating sub-groups as of December 31, 2010.
 
(FLOW CHART)


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The following chart shows the structure of the Wind Italy Group as of December 31, 2010 and identifies entities that are Wind Italy Spin-Off Assets.
 
(FLOW CHART)
 
The following charts show the structure of the OTH Group as of December 31, 2010. The first chart shows the OTH Group’s GSM assets and their holding companies, and the second chart shows the non-GSM assets. In each case, entities that are OTH Spin-Off Assets are identified. The chart below does not include Orascom Telecom Tunisia which has been divested.
 
(FLOW CHART)
 
 
(1) Zimbabwe has been deconsolidated as of December 21, 2003.
 
(2) Telecel International: OT Netherlands BV holds 999 ordinary shares and OT Eurasia 1 deferred share.
 
(3) OT Ventures: OT holds 50,000 ordinary shares and OT Eurasia 1 deferred share.
 
(4) TMGL: IWCPL holds 1,999 shares and OT Eurasia 1 deferred share.
 
(5) IWCPL: OTH holds 86,641,308 redeemable preference shares and 5,869 ordinary shares and OT Eurasia 1 additional redeemable preference share.


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(6) Oratel: 166,500,000 ordinary shares and OT Eurasia has 1 deferred share.
 
(7) Moga Holding: 50,000,000 ordinary shares and OT Eurasia has 1 deferred share.
 
(8) OIH: OTH holds 50,000 ordinary shares and Orascom Luxembourg SARL has 1 deferred share.
 
(9) OTI: OIH holds 50,000 ordinary shares and OT Eurasia has 1 deferred share.
 
(10) Telecel Globe: OTH owns 1,999 ordinary shares and Orascom Luxembourg S.à r.l owns 1 deferred share.
 
(11) OT Lebanon: remaining shares held by individuals in their capacity as founding directors of the entity.
 
(12) OTH Canada (Malta) Ltd.: OTH holds 1,999 ordinary shares and OT Sàrl Eurasia 1 deferred share.
 
(13) GIHC: OTH (Canada) Ltd. holds a 65.08% economic interest and 32.02% voting right.
 
(FLOW CHART)
 
 
(1) Minimax: OTH holds 2,000 shares and OT Eurasia 1 deferred share — formerly called OT Asia.
 
(2) OT ESOP: Financial Power Plan Ltd holds 1,999 ordinary shares and OT Eurasia 1 deferred share.
 
(3) Financial Power Plan Ltd: OTH holds 50,000 ordinary shares and Orascom Luxembourg Sàrl holds 1 deferred share.
 
(4) OT CS: OTH holds 500,000 shares and Orascom Luxembourg Sàrl 1 deferred share.
 
(5) MLink: OTH holds 34,999 shares and OT Eurasia 1 deferred share. M-Link is in dissolution.
 
(6) DMSL (Database management Services Limited): OTH holds 2,000 shares and OT Eurasia 1 deferred share.
 
(7) Smart Village: Link Egypt owns 0.18%.
 
(8) MENA: OTH owns 95%, Intouch 1% and Link Development 4%.
 
(9) Sawyer Limited: OTH holds 2,000 shares and OIH Ltd 1 deferred share.
 
(10) OT Eurasia: Sawyer Ltd and OTH hold 950,000 and 49,999 ordinary shares, respectively and OIH 1 deferred share.
 
(11) Egyptian Space Company in liquidation. Investment 0.1% from OTCS.
 
(12) Contra (Egypt): Liquidation in process (98% held by Orasinvest and 0.1% held by OTCS).
 
(13) Oracap Far East Ltd: Oracap Holding holds 1,999 shares and OIH 1 deferred share.
 
(14) DMSA: Liquidation in process.
 
(15) CTC (Malta) Liquidiation in process. OTH owns 1 deferred share through OT Eurasia. Orasinvest Holding Inc. is shareholder of all other shares.
 
(16) OTWL: Liquidation in process.
 
(17) CAT: Bankruptcy filed; hearing ongoing.
 
(18) ARPU+: remaining 98.5% shareholding held directly by Intouch and 0.5% owned by Link Development.
 
Remaining shareholding held by individuals in their capacity as a representative of OTH and/or affiliate of OTH.


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Wind Telecom currently provides mobile telecommunications services, either directly or through joint ventures with its partners, in Italy (marketed under the “WIND” brand), and in the following emerging markets: Algeria (marketed under the “Djezzy” brand), Pakistan (marketed under the “Mobilink” brand), Egypt (marketed under the “Mobinil” brand), Bangladesh (marketed under the “banglalink” brand), Canada (marketed under the “WIND Mobile” brand), Zimbabwe (marketed under the “Telecel” brand), North Korea (marketed under the “koryolink” brand), Central Africa Republic (marketed under “Telecel” brand) and Burundi and Namibia (marketed under the “leo” brand).
 
Wind Telecom also provides fixed-line telecommunications and Internet services either directly or through joint ventures with its partners, to corporate and retail customers in Italy (marketed under the “WIND”, “Infostrada” and “Libero” brands). In addition, Wind Telecom owns and operates a number of telecommunications businesses that support its mobile and fixed-line businesses, including retail distribution of mobile SIM cards and scratch cards, distribution of handsets, handset procurement, content development and aggregation, logistical support, network construction and maintenance, international communications services and undersea fiber optic cables.
 
The Wind Italy Group
 
The Wind Italy Group’s Business
 
The Wind Italy Group offers mobile, Internet, fixed-line voice and data products and services to consumer and corporate subscribers. As of September 30, 2010, the Wind Italy group’s mobile business had approximately 19.6 million subscribers. The Wind Italy group’s fixed-line business, which includes Internet (broadband and dial-up), voice and data services, had approximately 2.0 million Internet subscribers (1.8 million broadband subscribers), and approximately 2.9 million voice subscribers.
 
As discussed in “The Spin-off Plan”, immediately after Closing the Wind Italy Spin-Off Assets will be transferred to Weather II. These assets are described below:
 
  •  The Italy- Greece Cable is an asset owned by Wind Italy. It is a 169 kilometer submarine cable consisting of 24 pairs of fiber optic that links to two technological sites located in Otranto, Italy and Aethos, Greece for the purpose of transporting and providing international traffic services.
 
  •  Libero portal business, including all assets and personnel owned or employed by Wind Italy associated with the Libero portal business. Libero generates revenues mainly through advertising and offers a range of content and other services, including a search engine, news, and “vertical” channels organized in groups such as finance, automotive, women and travel.
 
  •  ITNET S.r.l, an Internet service provider, which is a fully owned subsidiary of Wind Italy.
 
  •  100% ownership interest in WIS and its subsidiaries. WIS manages a long distance international telecommunications network, which provides voice and data services by satellite, electrical and optical cable and new generation technologies together with the related support services. WIS provides interconnection services for OTH Group operations in Algeria, Pakistan, Egypt, Bangladesh and several sub-Saharan operations. Pursuant to the terms of the Share Sale and Exchange Agreement, Weather II, WIS and VimpelCom will enter into an agreement at Closing to govern WIS services to Wind Telecom entities following Closing. See “Ancillary Agreements — WIS Framework Agreement” for more information.
 
Wind Italy Licenses
 
Wind Italy’s license to provide mobile telephone services in Italy using digital GSM 1800 and GSM 900 technology was issued in 1998 and expires in 2018. Wind Italy acquired its UMTS license in 2001, which is expected to expire in 2029. The UMTS license covers all Italian regional capitals.
 
Wind Italy’s fixed line services are provided pursuant to a 20 year license obtained from the Italian Ministry of Economic Development in 1998 that expires in 2018.


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The OTH Group
 
The OTH Group’s Business
 
The OTH Group is a mobile telecommunications company operating mobile telecommunications networks in markets in the Middle East, Africa and Asia, and as of September 30, 2010 had approximately 97 million subscribers (excluding operations in Tunisia, which have been divested since such date). The OTH Group’s four main GSM operations, held either directly or indirectly via joint ventures, are located in Algeria (OTA), Pakistan (Mobilink), Egypt (Mobinil) and Bangladesh (banglalink). The OTH Group also owns GSM networks in Africa, a majority interest in a 3G network in North Korea and an interest in a new entrant 3G operator in Canada.
 
With respect to the OTH Group’s non-GSM businesses, Ring Distribution S.A.E. (“Ring”) provides a range of services, including retail distribution, handset procurement and assembly, logistical support and customer care and service centers, and ARPU+ provides consumer and business internet services and mobile value-added services.
 
OTA — Algeria
 
OTA operates a GSM network in Algeria and provides a range of prepaid, postpaid and hybrid postpaid-prepaid products encompassing voice, data and multimedia, using the corporate brand “Orascom Telecom Algérie” and the two commercial brands of “Djezzy” and “Allo.” OTA launched its operations in February 2002. OTA commenced operations under the brand “Djezzy” and introduced the prepaid brand “Allo” in September 2004.
 
As of September 30, 2010, the OTH Group directly or indirectly owned 96.81% of OTA, the remaining economic interest held by Cevital, a major Algerian manufacturer of food products and a non-OTH related entity, with a 3.19% direct shareholding of OTA. Under the terms of OTA’s license, the OTH Group is required to own more than 50% of the share capital and voting rights of OTA at all times. For information regarding the risks associated with OTA’s operations in Algeria, see “Risk Factors — Risk Factors Relating to the Transaction — The Algerian Government has made substantial tax and other claims against OTA which have harmed OTA’s business and the Algerian Government has announced its intention to unilaterally acquire OTA from OTH”.
 
Pakistan Mobile Communications Limited
 
Pakistan Mobile Communications Limited (“Mobilink” or “PMCL”) operates a GSM network in Pakistan and provides a range of prepaid and postpaid voice and data telecommunications services to both retail and corporate subscribers, using the brand name “Mobilink”. Mobilink launched its operations in August 1994 after it was founded in 1990 as a joint venture between Motorola and the Saif Group.
 
The OTH Group has a 100% economic interest in Mobilink.
 
Orascom Telecom Bangladesh Limited
 
Orascom Telecom Bangladesh Limited (“OTBL”) (formerly known as Sheba) operates a GSM telecommunications business in Bangladesh and provides a range of prepaid and postpaid voice and data telecommunications services, using the brand name “banglalink”.
 
OTH owns 100% of Orascom Telecom Ventures, which owns 100% of the shares of OTBL (the percentage ownership includes a de minimis number of directors and other qualifying shares). Under a technical assistance agreement, OTH provides services to OTBL in exchange for a fee. If OTBL’s GSM license is renewed, the management services will be automatically extended for the period of renewal.
 
Telecel Globe — Africa
 
Telecel Globe launched its operations in February 2008. It is an international telecommunications company that manages GSM operators in small and medium sized developing countries with high growth potential. Telecel Globe currently owns GSM networks in the Central African Republic (through Telecel Centrafrique), Burundi (through its subsidiary U-COM) and Namibia (through its subsidiary PowerCom).


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In addition, Telecel Globe manages a GSM network in Zimbabwe (Telecel Zimbabwe). Telecel Zimbabwe is 60% indirectly owned by OTH. The remaining 40% stake in Telecel Zimbabwe is held by the Empowerment Corporation of Zimbabwe, a consortium of local Zimbabwean investors.
 
WIND Mobile — Canada
 
OTH holds its interest in Globalive Wireless Management Corp. (“Wind Mobile”), a spectrum license holder in Canada, and other Canadian telecommunications companies through Globalive Investment Holdings Corp. (“Globalive Holdings”). OTH indirectly holds approximately 65% of the outstanding shares of Globalive Holdings and approximately 32% of voting rights. For information regarding challenges to the legality of WIND Mobile’s ownership structure, see “Risk Factors Relating to Wind Italy’s Business — Risks Relating to OTH’s Business — The legality of OTH’s ownership structure for operations in Canada is being challenged” in Annex B.
 
OTH Group’s Licenses
 
             
License Holder(i)
 
License Type
 
Territorial Coverage
 
Expiration Date
 
OTA
  GSM 900/1800 (mobile)   Algeria   April 18, 2016
OTA
  VSAT data-voice license (mobile)   Algeria   February 28, 2014
Mobilink
  Mobile communications services and mobile virtual networks operator (“MVNO”)   Pakistan (excluding Azad Jammu & Kashmir)   July 5, 2022
Mobilink
  MVNO services (radio spectrum of 4.8, 4.8MHz and 8.8, 8.8MHz)   Azad Jammu & Kashmir, and Gilgit Baltistan   June 25, 2021
OTBL
  GSM 2.6MHz (mobile)   Bangladesh   November 29, 2026
Telecel Globe
  GSM 900/1800 (mobile and Internet)   Zimbabwe   June 1, 2013
Telecel Globe
(Telecel-CAR)
  GSM 900/1800 (mobile)(2)   Central African Republic   July 30, 2038
Telecel Globe (U-COM Burundi) SA
  GSM 900/1800 (mobile)   Burundi   April 29, 2014
Telecel Globe (U-COM Burundi) SA
  CDMA   Burundi   August 3, 2021
Telecel Globe (PowerCom) Pty
  GSM 900/1800; 35 (mobile)   Namibia   July 28, 2021
WIND Mobile(3)
  International Telecommunications Services   Telecommunications between Canada and other countries   June 30, 2019
 
 
(1) Licenses belonging to the OTH Spin-Off Assets are not included.
 
(2) Under the terms of the license, Telecel Zimbabwe was required to have a maximum foreign ownership of 49% by June 2007. Due to the economic and political circumstances, Telecel International was not able to dispose of the 11% it owns in excess of 49% and on August 9, 2007, the Zimbabwean Regulatory authority issued a licence cancellation order notice to Telecel Zimbabwe, which was suspended on August 15, 2007, pending a decision by the Minister of Transport and Communication.
 
(3) For information regarding challenges to the legality of WIND Mobile’s ownership structure, see “Risk Factors Relating to Wind Italy’s Business — Risks Relating to OTH’s Business — The legality of OTH’s ownership structure for operations in Canada is being challenged” in Annex B.


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The OTH Spin-off Assets
 
As discussed in “The Spin-off Plan”, the OTH Spin-off Assets will be transferred to Weather II shortly after Closing. The OTH Spin-off Assets are described below.
 
  •  MobiNil/ECMS.  Orascom holds, directly and indirectly through MobiNil, a 34.6% interest in ECMS. ECMS operates GSM network in Egypt and provides a range of prepaid and postpaid voice and data telecommunications services, using the brand name “Mobinil”.
 
  •  Koryolink.  OTH has a 75% interest in a North Korean joint venture (CHEO Technology Joint Venture Company) with the Korean Post and Telecommunications Company (which holds 25%) which operates in the Democratic People’s Republic of Korea. The joint venture operates under the brand name “koryolink”.
 
  •  Medcable/TWA.  OTH holds a 100% stake in Medcable UK (“Medcable”) and a 51% stake in Trans World Associate (Private) Limited (“TWA”), which build and operate undersea fiber optic cables to carry international voice and data traffic between Algeria and Pakistan and international telecommunications hubs in Europe and the Middle East.
 
  •  MENA.  OTH holds, directly and indirectly, a 100% interest in Middle East and North Africa for Sea Cables (Free Zone II) (“MENA”), which builds, operates and rents sea cables, networks and infrastructure for international telecommunications.
 
  •  Intouch.  Intouch owns Egyptian Internet portals and other ventures in Egypt including Link Development, ARPU+ and LINKonLINE.
 
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
 
This proxy statement contains or incorporates by reference “forward-looking statements”. Forward-looking statements provide VimpelCom’s current expectations or forecasts of future events. Forward-looking statements include statements about VimpelCom’s expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Any statement in this proxy statement that expresses or implies VimpelCom’s intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. The risks and uncertainties include, but are not limited to, the following:
 
  •  the integration of Wind Telecom into the VimpelCom group may not occur as planned;
 
  •  Telenor opposes the Transaction and has challenged it;
 
  •  if Telenor is successful in the Arbitration Proceedings, it could lead to significant dilution to the VimpelCom Minority Shareholders;
 
  •  VimpelCom may not realize the anticipated benefits from the Transaction and may assume unexpected or unforeseen liabilities and obligations or incur greater than expected liabilities in connection with the Transaction;
 
  •  the Transaction remains subject to satisfaction or waiver of several conditions; and
 
  •  other factors discussed in “Risk Factors” and in Annex A and Annex B.


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Our actual results could differ materially from those anticipated in forward-looking statements for many reasons. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this proxy statement. We undertake no obligation to revise any forward-looking statement to reflect circumstances or events after the date of this proxy statement or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we file from time to time with the SEC after the date of this proxy statement.
 
ENFORCEABILITY OF CIVIL LIABILITIES UNDER THE UNITED STATES SECURITIES LAWS
 
We are organized under the laws of Bermuda and headquartered in the Netherlands. Most of our directors, officers and experts named in this proxy statement are not residents of the United States, and all or a substantial portion of their assets and almost all of our assets are located outside of the United States. As a result, it may be difficult for you to effect service of process within the United States upon us or our directors, officers and experts who are not residents of the United States or to enforce in the United States judgments of U.S. courts based upon civil liability under the federal securities laws of the United States. Further, no claim may be brought in Bermuda against us or our directors and officers in the first instance for violations of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have the force of law in Bermuda. A Bermuda court may, however, impose civil liability on us or our directors and officers if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda law.
 
We have been advised by Wakefield Quin Limited, our Bermuda counsel, that there is doubt as to whether the courts of Bermuda would enforce judgments of U.S. courts obtained in actions against us or our directors and officers, as well as the experts named in this proxy statement, predicated upon the civil liability provisions of the U.S. federal securities laws or would hear original actions brought in Bermuda against us or such persons predicated solely upon U.S. federal securities laws.
 
Further, we have been advised by Wakefield Quin Limited that there is no treaty in effect between the United States and Bermuda providing for the enforcement of judgments of U.S. courts. While a judgment of the U.S. courts may be the subject of enforcement proceedings in Bermuda, there are grounds upon which Bermuda courts may decline to enforce judgments of U.S. courts and the judgement would not be automatically enforceable. Some remedies available under U.S. law, including some remedies available under the U.S. federal securities laws, may not be enforced by Bermuda courts because they are contrary to Bermuda’s public policy. Because judgments of U.S. courts are not automatically enforceable in Bermuda, it may be difficult for you to recover against us based upon such judgments.
 
Our process agent in the United States is CT Corporation System, located at 111 Eighth Avenue, 13th Floor, New York, New York, 10011.


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SOLICITATION OF PROXIES
 
VimpelCom will bear the costs of this solicitation of proxies in connection with the Special General Meeting. Solicitation will be made by mail, telephone, facsimile, telegraph, the Internet, e-mail, newspapers and other publications of general distribution and in person and may be made by directors, officers and employees, personally or by telephone or e-mail. Proxy forms, voting cards, voting instructions and materials will be distributed to registered holders of VimpelCom shares by VimpelCom, to registered holders of VimpelCom ADSs through the Depositary and to owners in street name of VimpelCom ADSs through brokers, custodians, nominees and other parties, and VimpelCom expects to reimburse such parties for their charges and expenses.
 
VimpelCom has retained D. F. King & Co., Inc. to assist with soliciting shareholder proxies, and D. F. King & Co., Inc. will receive customary fees plus reimbursement of expenses.
 
If you have any questions concerning this proxy statement or the procedures to be followed to execute and deliver a proxy, please contact D. F. King & Co., Inc. by any of the following methods:
 
Mail
 
48 Wall Street, 22nd Floor
New York, NY 10005
1 Ropemaker Street, 34th Floor
London, EC2Y 9HT
 
Email
 
vimpelcom@dfking.com
 
Phone
 
+1 800 431 9645 (toll-free from the U.S. and Canada)
00800 5464 5464 (toll-free from Continental Europe)
+1 212 269 5550 (banks and brokers call collect)
+44 207 920 9700 (from other locations)
 
INFORMATION REGARDING WIND TELECOM
 
Information in this proxy statement regarding the businesses and financial condition of Wind Telecom, including information about its subscribers, licenses and the nature and scope of its operations, which is primarily located in “Risk Factors — Risk Factors Relating to the Transaction”, “Description of the Business of Wind Telecom”, Annex B and the consolidated financial statements of Wind Telecom included herein, is derived from materials provided to us by Wind Telecom. We express no opinion and make no representation as to the accuracy or completeness of such information.
 
Furthermore, this proxy statement includes the consolidated financial statements of Weather Investments S.p.A., the predecessor of Wind Telecom, as at and for the year ended December 31, 2009, together with the Weather Investments Group Report on Operations at December 31, 2009 and the auditor’s report of KPMG S.p.A (collectively, the “Year-End Financial Information”), and the consolidated interim financial statements for the nine-month period ended September 30, 2010 (the “Interim Financial Information”). The Year-End Financial Information and the Interim Financial Information correspond to those filed with the registered office of Wind Telecom. After the date of the auditor’s report on the Year-End Financial Information, KPMG S.p.A. has not performed any procedures to update the contents of such auditor’s report on the Year-End Financial Information.
 
The Year-End Financial Information and the Interim Financial Information contain information that speaks only as of the date specified therein and should not be read as a current description of the Wind Telecom group, its operations or financial condition. We note in particular that the Year-End Financial Information and the Interim Financial Information include information on the Wind Hellas Group, which is excluded from the Transaction, and on the OTH Spin-Off Assets and Wind Italy Spin-Off Assets, which are intended to be demerged from the Wind Telecom group following Closing, and do not reflect recent changes to the Wind Telecom group, such as the sale of Orascom Telecom Tunisia.


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WHERE YOU CAN FIND MORE INFORMATION
 
VimpelCom is subject to the information reporting requirements of the Exchange Act applicable to foreign private issuers. As a “foreign private issuer,” VimpelCom is exempt from the rules under the Exchange Act prescribing certain disclosure and procedural requirements for proxy solicitations. VimpelCom files reports and other information with the SEC. This information includes financial information presented in Amendment No. 4 to VimpelCom’s Registration Statement on Form F-4 filed by VimpelCom with the SEC on March 25, 2010, which includes the audited consolidated financial statements of Kyivstar as at December 31, 2009, 2008 and 2007 and for each of the years in the three-year period ended December 31, 2009 and the financial information presented in OJSC’s Annual Report on Form 20-F for t