As of the most recent check, VEON Ltd. (VEON) shares were up 27.01% to $0.5906 in pre-market trading on reports that the global digital operator has been selling some of its assets.
What assets have VEON been selling?
Following a competitive procedure, VEON Ltd. (VEON) announced that it has reached an agreement to sell VEON’s Russian business to a number of senior members of PJSC VimpelCom’s (“VimpelCom”) management team, led by its current CEO Aleksander Torbakhov.
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A 3.2x multiple of the estimated enterprise value to 2022E EBITDA is implied by the management buyout of VimpelCom, which suggests an expected enterprise value of around RUB 370 billion. For the full year that concluded on September 30, 2022, VimpelCom produced revenue of 339 billion rubles and an EBITDA of 115 billion.
In accordance with the agreement, VEON will be paid a total of RUB 130 billion (approximately USD 2.1 billion). VEON anticipated that the majority of the entire price would be covered by VimpelCom assuming and then repaying the certain debt owed by VEON Holdings B.V., considerably deleveraging VEON’s financial sheet. The deal is subject to the usual closing requirements, such as receiving the necessary regulatory approvals, licenses from pertinent government agencies, and any necessary approvals from VEON creditors.
The deal is expected to close on or before June 1, 2023, with options for extensions for both parties in the event that the necessary regulatory licenses have not yet been obtained. The ownership of VEON’s activities in Kazakhstan will be transferred to VEON Holdings B.V. as part of the deal, and some intercompany debts will be canceled. By obtaining direct control of the Group’s 75% investment in Kar-Tel, which operates under the Beeline brand, VEON Holdings B.V. will guarantee that the company will continue to consolidate its activities in Kazakhstan.
Additional terms of the agreement for VEON:
Additionally, the agreement contains a customary clause that gives VEON Ltd. (VEON) the ability to profit from a potential future event, such as the sale of VimpelCom at a higher price, for a period of 30 months after closing. It also stipulates customary termination rights in VEON’s favor in the event of a change in control of the buyer entity (JSC Kopernik-Invest). The VEON Agreement provides for international dispute resolution and is controlled by Russian law.