The Netherlands-founded company, Veon, has recently refined the management buyout terms of its sector in Russia, known as VimpelCom. About a year ago, Veon initially agreed to sell VimpelCom to a consortium led by the company’s CEO, Aleksander Torbakhov, at a cost of $2.1 billion. A significant portion of this payment was to be financed by VimpelCom undertaking part of Veon’s debt and subsequently retiring it.
Transitioning to the present, Veon has announced that the entire transaction will now be funded this way. However, the transfer of some bonds is apparently pending regulatory approval. Veon has been given the go-ahead for approximately 95 percent of the bonds, which will be transferred before the deadlock. The remaining bonds are slated for transfer as soon as Veon receives regulatory approval. Interestingly, this could happen post-transaction completion.
Veon’s group CEO, Kaan Terzioglu, expressed satisfaction over the progress achieved despite the transaction’s complexities, stating, “Our exit strategy is the optimal solution for all our stakeholders – our customers, employees, creditors and investors world-wide”.
Several Russian financial institutions are under sanctions, which has made it difficult for Veon to enwrap its business. To illustrate, a management buyout facilitated by a debt transfer proved to be Veon’s only viable pathway for a swift exit. International banks could hardly have been anticipated to finance an investment into Russia under the circumstances.
The problem of Eurobonds was also raised. In May, Veon initiated a course of action to terminate Veon Eurobonds held by VimpelCom, because VimpelCom was unable to collect interest on these due to Russia’s Eurobonds clearing house, the National Settlement Depository (NSD), being under EU sanctions.
Once the VimpelCom deal is sealed, this will lift a significant impediment for Veon, who faces a demanding workload in Ukraine operating under the Kyivstar brand. Veon declared a $600 million strategy to rebuild Kyivstar’s 4G and fibre infrastructure over the forthcoming three years.
Looking to the future, Veon is also keeping an eye on Open RAN. In August, a memorandum of understanding was signed with Rakuten Symphony to execute Open RAN-based 5G networks to support a host of new digital services. Though the commencement date for this deployment remains unclear, it highlights where Veon envisages its long-term priorities.
