The Ministry of Finance, the Ministry of Economy and the Central Bank opposed the deal on the sale of VimpelCom by the holding Veon to the Russian top management of the operator in its current form. The scheme did not suit the holders of Veon Eurobonds, who have already tried to suspend the process through the courts. According to lawyers, the government wants to hold off on the deal until full certainty with debt settlements. In the meantime, according to Kommersant, negotiations have already begun on the resale of VimpelCom.
A Kommersant source in the government said that the government commission on foreign investment did not agree on a deal to sell VimpelCom by Veon holding to Russian top management, headed by CEO Alexander Torbakhov. The issue was considered today, he specified, the Central Bank, the Ministry of Finance and the Ministry of Economy opposed the deal in the current configuration. Another official confirmed that the deal was “sent for revision.” The third interlocutor of Kommersant assures that “the issue of VimpelCom was simply postponed.” In the office of Prime Minister Mikhail Mishustin, Kommersant did not respond. The Ministry of Digital Development, the Ministry of Economy and the Ministry of Finance did not provide comments. Vimpelcom refused to discuss the situation, Veon did not respond to a request.
VimpelCom (Beeline brand) announced in November 2022 that a group of top managers of the company headed by CEO Alexander Torbakhov entered into an agreement to acquire 100% of it from Veon. The buyer was supposed to be OAO Copernicus-Invest 3, Mr. Torbakhov. According to Kommersant, VimpelCom was going to buy back the debt of Veon Holdings BV on Eurobonds from the holders by issuing replacement bonds that would actually double the debt burden of the Russian company (the entire VimpelCom was valued at 370 billion rubles during the sale, the company’s net debt is 240 billion rubles).
The amount of the transaction was to be 130 billion rubles. (about $2.1 billion). As an interlocutor familiar with the details of the negotiations explained to Kommersant, part of the funds was intended to pay off the debt of Veon Holdings BV on Eurobonds, and part to the holding itself.
It was also assumed that in the event of a resale of the asset within 30 months, Veon could “benefit or terminate the transaction.”
The sale of the company to top management was originally planned as an interim solution, says a top manager of a large telecommunications company, in the future VimpelCom was supposed to go to a profile investor. According to a Kommersant source close to the government, at the end of 2022, the presidential administration considered the issue of Gazprom becoming such an investor. The fact that the gas monopoly participated in negotiations with Veon back in 2022 is also said by Kommersant’s interlocutors familiar with them. A source close to Gazprom confirmed that there was interest in the asset, but now the company is not participating in the negotiations. Kommersant’s interlocutors say that Gazprom-Media Holding, MTS and Sberbank were also noticed in the discussions. VimpelCom says they are “focused on restructuring our business and are not negotiating resale.”
However, the deal immediately raised questions from regulators and creditors. Thus, the Ministry of Finance demanded that VimpelCom ensure the fulfillment of obligations to holders of Eurobonds. Some of them, including the Leader company (which manages the assets of NPF Gazfond), have begun litigation. To resolve the situation, Veon launched a settlement procedure in the UK to obtain the consent of holders of bonds worth $ 1.2 billion due in 2023 to defer it. In January, VimpelCom itself filed a lawsuit against the Central Bank, challenging the decision that the Russian division of a foreign company should pay for Veon bonds, a preliminary hearing in the case was scheduled for February 13.
A source familiar with the position of the government commission claims that the deal is aimed at finalization “to protect Russian investors who are shareholders of the company.”
The settlement scheme proposed to holders of Eurobonds in the UK has been approved by bondholders, and it will be considered in court on January 30 in London, says Elena Mende, lawyer of the Baltic Bar Association named after Anatoly Sobchak: to find a way to pay the bondholders.”
Probably, the lawyer notes, this development of the situation does not suit the Russian regulators, who do not want to release Veon from Russia before settling with bond holders. This period, Ms. Mende specifies, also roughly corresponds to the time for the consideration of cases in Russian courts.