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VEON agrees sale of Russian operations to senior management

25 Nov 2022

Amsterdam-based multinational telecoms group VEON yesterday (24 November 2022) announced that, following a competitive process, it has entered into an agreement to sell its Russian fixed and mobile network operating division PJSC VimpelCom (Beeline) to senior members of the latter’s management team led by CEO Aleksander Torbakhov.

Under the agreement, VEON says it will receive a total consideration of RUB130 billion (USD2.15 billion), expected to be paid primarily by PJSC VimpelCom taking on and discharging certain VEON Holdings (Netherlands) debt, thus significantly deleveraging VEON’s balance sheet. The transaction is subject to customary closing conditions, including receipt of requisite regulatory approvals, licences from relevant government authorities and any required consent from VEON creditors. The target completion date is on or before 1 June 2023, with options on both sides for extensions in case any required regulatory licence has not yet been received.

The management buyout deal implies an expected enterprise value of approximately RUB370 billion for Beeline Russia, representing an expected enterprise value/2022 EBITDA multiple of 3.2×. For the twelve months ended 30 September 2022 the Russian unit generated revenue of RUB339 billion and EBITDA of RUB115 billion.

The deal involves the establishment of a special purpose acquisition vehicle, Kopernik-Invest 3, 100% indirectly owned by the members of PJSC VimpelCom senior management participating in the transaction.

The agreement also includes a customary provision that enables VEON to benefit from a potential subsequent sale of Beeline Russia at a higher valuation, for a period of 30 months following closing, and provides for typical termination rights in favour of VEON in case of a change in control of the buyer entity (Kopernik-Invest 3). The agreement is governed by Russian law and provides for international dispute resolution.

Additionally, the deal requires ownership of VEON’s 75%-held Kazakh operating division KaR-Tel (Beeline Kazakhstan) to be transferred directly to VEON Holdings, with certain inter-company loans to be extinguished, ensuring that VEON will continue to consolidate its operations in Kazakhstan.

Russia, Beeline (Russia), KaR-Tel (Beeline), VEON

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