VEON starts to cancel Eurobonds repurchased by VimpelCom for Russia exit

MOSCOW. May 30 (Interfax) - VEON has submitted all necessary documentation to Euroclear, Clearstream and registrars for cancellation of VEON's Eurobonds held by its subsidiary VimpelCom, the holding said in a statement.

The company is now entering the final stages in the closing of the sale of VEON's Russia operations, which was announced in November 2022.

According to the terms of the VEON bonds, the registrar is required to cancel the VEON bonds purchased by a subsidiary of VEON and surrendered to the registrar for cancellation.

The cancellation of VEON's Eurobonds is a non-cash transaction necessary for the company's timely exit from Russia, and protects VEON and its investors from a risk of double payments in the future. "We look forward to the completion of this cancellation, a milestone in the closing of the sale of VEON's Russia operations," said Kaan Terzioglu, CEO of VEON Group

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 due numerous sanctions imposed against Russia.

Resolving the issue of payments to Russian holders of VEON Eurobonds was a condition for the authorities to agree on a deal to sell its Russian subsidiary, VimpelCom, to local management, announced in November last year. VEON entered into an agreement to sell VimpelCom by June 1, 2023.

Digital Development Minister Maksut Shadayev said at the beginning of February that the government commission for foreign investment approved the deal to sell VimpelCom to its management on the condition that VimpelCom buys back at least 90% of VEON Eurobonds from Russian investors.

VEON has five issues of dollar-denominated Eurobonds and three issues of ruble Eurobonds outstanding. An authorized broker has since the end of February been buying VEON Eurobonds back from Russian holders at a price ranging from 79.6% to 92.8% of face value, depending on the issue; they could also be exchanged for new VimpelCom exchange-traded bonds.

VimpelCom said in a report at the end of March that it had bought back Eurobonds issued by VEON Holdings B.V. with a total face value of $1.26 billion and 23.9 billion rubles in February-March. Also during this period, exchange-traded and commercial bonds were issued with a total face value of 119.3 billion rubles. VEON itself said at the beginning of May that VimpelCom bought back Eurobonds with an aggregate face value of $1.6 billion, which is comparable to the figures given in VimpelCom's report.

The VEON statement published on Tuesday does not specify what volume of Eurobonds will be cancelled.