Veon Launches Bondholder Identification Exercise; Houlihan Lokey, Milbank Talking to Holders of c.30% of Veon Notes Ahead of Potential Proposal

Dutch-headquartered telecoms group Veon has launched a bondholder identification exercise, sources told Reorg's EMEA Core Credit team. The exercise relates to all notes due between 2023 and 2027 and will expire on Aug. 15.

Houlihan Lokey and Milbank have been talking to investors holding approximately 30% of Veon’s bond debt ahead of a potential proposal from the company. The company has not sounded out the group about the purpose of the identification process, sources said.

The company told Reorg it is looking to update its general understanding of who holds its bonds in light of recent trading volumes.

Veon with its large Russian market exposure also has a number of Russian investors holding its notes and the company may be trying to identify any sanctioned entities among its own creditors, sources close told Reorg. Veon itself is not sanctioned but its largest indirect shareholders, Mikhail Fridman and Petr Aven, were sanctioned on Feb. 28 following Russia’s invasion of Ukraine four days earlier. Fridman resigned from the board on the same day.

In its 2021 annual report, Veon warned that it has experienced “difficulties in transacting with certain key suppliers, business partners and other key counterparties at the group level” adding that it may struggle to hire an auditing firm for the 2022 financials.

Management underscored that without audited financials, Veon may not obtain financing to meet its capital needs, service its debt, or to even access the existing cash held in third-party bank accounts. Further, it could lead to a delisting of the group’s securities.

Veon noted that many multinational companies and firms, including certain of its service providers, partners and suppliers, are self-sanctioning due to Veon’s significant Russia operations, as a result of the ongoing war between Russia and Ukraine.

Houlihan Lokey and Milbank declined to comment.

Veon’s capital structure is below:

– Connor Lovell, Magnus Scherman