3 Feb 2023 11:35

Russian holders of Veon Eurobonds can expect redemption in coming months - minister

ALMATY. Feb 3 (Interfax) - The Russian holders of the Eurobonds of telecom group Veon can expect them to be redeemed in the next month or two, Digital Development Minister Maksut Shadayev said.

The buyout of the bonds, which was one of the conditions for the Russian authorities' approval of Veon's sale of its Russian mobile provider Vimpelcom, could take place in one or two months, and then the deal itself will "either happen or not," Shadayev said.

Veon entered into an agreement in late November to sell Vimpelcom to the latter's local senior management led by CEO Alexander Torbakhov. Veon is expected to sell the company for 130 billion rubles, with most of this amount paid by the Russian business assuming part of the group's debt. The deal is expected to be finalized by June 1, 2023, with a possible extension for closure given certain conditions.

Shadayev, speaking to reporters on the sidelines of the Digital Almaty 2023: Digital Partnership in the New Reality forum, said the government commission for foreign investment approved the deal on the condition that Vimpelcom will buy back at least 90% of Veon Eurobonds from Russian investors. The conditions must be equal for all bondholders, he said.

The buyout could happen within the next two months, he said. "I think that the timeframe will be very short. I think it's a question of a month or two. Then it, this deal, will either happen or not," Shadayev said.

It was reported earlier that the deal immediately raised concerns among regulators and creditors. The Finance Ministry demanded security for the fulfillment of obligations to Russian holders of Veon Eurobonds. Some of them, including Leader, the manager of the Gazfond pension fund, initiated legal proceedings in Russia against Vimpelcom, demanding fulfillment of obligations on Veon Eurobonds. Leader asked the court for an injunction on Vimpelcom's sale until Russian holders of Veon Eurobonds receive guarantees of payment, but this request was denied.

Veon cannot currently convey payments on Eurobonds to investors whose bonds are held through Russian infrastructure, since international clearing systems are blocking such transfers to the National Settlement Depository (NSD) due to sanctions imposed against Russia.

Last November, Veon proposed to holders of two dollar-denominated Eurobond issues to defer their redemption by eight months. The group said that payment for its sale of Vimpelcom will be carried out in the form of transferring a portion of Veon's bond debt to the Russian provider. The arrangement proposed by Veon and approved by Eurobond holders and a London court allows for the group's dollar Eurobonds maturing in 2023 to be redeemed at 102% of face value, along with the payment of accumulated coupon income.