Izosimov Won't Insist On Paying Dividends

DAVOS, Switzerland — VimpelCom CEO Alexander Izosimov said Wednesday that he was "less adamant" about proposing that the company pay dividends because of a split in shareholder views on the issue.

"I reserve comment on what the management position will be, but I am less adamant that we should pay -dividends," Izosimov said in an interview. "This is very sensitive. It is not a reflection of the financial position of the company in any way. In many ways, that is stronger compared to November."

In November, VimpelCom said its management intended to recommend to its board paying dividends for 2008 and it felt comfortable with its ability to meet its debt obligations from its own cash flow. The company paid a $587 million dividend for 2007.

"People are very split on dividends," Izosimov said. "Some shareholders say you are viewed as a financially distressed company, and one side says that means you should pay dividends while the other side says you should not."

Izosimov reiterated that VimpelCom would meet all its debt payments — which total about $1.8 billion in 2009 — even if it could not borrow. He said debt payments would total over $2 billion in 2010.

"Under the worst scenario, and if there was no possibility of borrowing because there is currently a lack of confidence in the Russian economy and Russian currency … we will comfortably meet these debt obligations out of our own cash flow," he said.

He said the company might explore selling ruble bonds to change the company's debt structure. He said the bonds would have a maturity of up to three years.

Izosimov said the company had not asked for help from Vneshekonombank, the distributor of Russia's anti-crisis package.

"It is just not necessary for us, but it is good for us and the shareholders to know that the state would be behind us if there was some sort of trouble," he said.

Izosimov supported government steps aimed at tackling the crisis but said banks needed to resume lending to companies to help the economy recover.

"The biggest thing is how to unplug the banking system so that banks start to give out loans to the real economy, because the money is in abundance in the banking system, but still it doesn't flow," he said.

"There are two issues here: overhang on ruble devaluation — no one wants to accept the risk — and the solvency of recipients. And some sort of government guarantee on the side of the recipients could help a lot," he said.

He said VimpelCom's investment plans for 2009 were uncertain but added that he saw the economy rebounding faster than after the 1998 crisis.