Vimpelcom Shares Plunge As Company Slashes Dividend Payout

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Russia's Vimpelcom has announced that it is slashing the dividend it pays to its shareholders as it seeks to conserve cash and pay down debt.

The news sent the company's shares down by 13 percent as investors reacted to the unexpected news.

The company said at an investor update that it will be cutting its dividend in future from the previous guidance of around 80 cents per share to just 3.5 cents per share. It is also cancelling the dividend payment for 2013.

Vimpelcom expects to maintain the low payout to shareholders until its debt has fallen to an EBITDA ratio of under 2 times. The firm expects to have reduced the net debt to an  EBITDA ratio of about 2.3 by the end of 2014.

The company has invested heavily in acquisitions in recent years and built up a sizeable debt as a consequence. It may now come under pressure to consider some disposals.

Russian billionaire, Mikhail Fridman's Alfa Group owns 56% of Vimpelcom, which while generally considered to be a Russia based firm is actually headquartered in Amsterdam.

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