Shareholder's conflicts: VimpelCom Board Affirms Validity of Shareholder Decision of the EGM But Fails to Give Guidance to Management on URS Acquisition

16.09.2005, MForum.ru

Moscow and New York (September 16, 2005) – Open Joint Stock Company “Vimpel-Communications” (“VimpelCom” or the “Company”) (NYSE: VIP) announced that its Board of Directors met in Moscow today and discussed the results of the rescheduled Extraordinary General Meeting of Shareholders held on September 14, 2005 (the “EGM”). The EGM was convened by Eco Telecom Limited, a part of Alfa Group. As previously disclosed, the shareholders approved the acquisition of Closed Joint Stock Company “Ukrainian Radio System” (“URS”) as an interested party transaction, which was the sole item on the agenda of the EGM.

The Board discussed due diligence and other issues regarding this acquisition that have been raised recently. In addition, the Board received fairness opinions on the URS acquisition from Citigroup Global Markets Limited and UBS Limited.

The Board also discussed several letters issued by Telenor East Invest AS (“Telenor”) to the Company. One letter stated that "the EGM has not been validly convened” and “the EGM and any decision of the EGM are subject to challenge and the possibility of being declared null and void by a Russian court". In these letters, Telenor also stated that it “will not hesitate to take legal action” to “prevent or undo the consummation of the acquisition” and/or against VimpelCom’s Chief Executive Officer if he causes VimpelCom to consummate the acquisition of URS without the prior approval of no less than 80% of the Board.

Following this discussion, the Board failed to approve two separate proposed resolutions which would have provided specific guidance to the CEO regarding the next steps to be taken with respect to this acquisition, namely whether to instruct management to proceed or to instruct management to obtain additional 80% board approvals.

At the end of the discussion, the Board voted to affirm the validity of the shareholder decision of the EGM with five directors in favor, three against, and one abstaining.

Alexander Izosimov, the Company’s Chief Executive Officer, stated, “I regret that the Board was unable to provide clear guidance on this important issue today. Nevertheless, in light of the Board having reaffirmed the shareholders’ decision today, management plans to finalize the negotiations for the acquisition of URS unless someone challenges us in court.”

Commenting on today’s Board meeting, VimpelCom’s Chairman, David Haines, said, “Today our Board affirmed the validity of the shareholder decision at the EGM. Unfortunately, however, our directors have not yet reached an agreement with respect to the next steps to be taken on the Ukrainian issue. I will continue to work with management and the Board to move forward with our business, focusing on creating value for all of our shareholders.”

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