VEON CEO letter to 2023 Noteholders

Amsterdam, 16 January 2023 - VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a global digital operator that provides converged connectivity and online services, has today contacted holders (the 2023 Noteholders ) of interests in the 5.95% notes due February 2023 and the 7.25% notes due April 2023 (together, the 2023 Notes ) issued by VEON Holdings BV ( VEON Holdings ) in relation to the English Scheme of Arrangement (the Scheme ) that aims to extend the maturities of the 2023 Notes by eight months from their respective maturity dates.

In the letter, VEON's Chief Executive Officer Kaan Terzio lu requested the assistance and cooperation of 2023 Noteholders in connection with the Scheme, and specifically requested them to vote in favour of the Scheme at the forthcoming scheme meeting taking place on 24 January 2023. The deadline by which 2023 Noteholders must submit their Voting and Proxy Forms (or, if the 2023 Noteholder holds their 2023 Notes through DTC, procure that their DTC participant submits on their behalf) is 5.00 p.m. (London time) on 20 January 2023. The letter further explained:

We understand the significance of what we are asking and take our obligations to our stakeholders, including the repayment of our debts in full and on time, very seriously.

However, despite strong operational results and a strong balance sheet, given the current circumstances, we must consider the repayment of the 2023 Notes within the context of our future debt obligations beyond 2023 and the difficulties VEON currently faces in raising debt or equity on the international capital markets on commercially acceptable terms. It is this which has led us to take the decision to launch the Scheme, as we believe it would provide the best route to us repaying you in advance of VEON Holdings' other future debt obligations.

Your support and the resultant implementation of the proposal set out in the Scheme will enable us to avoid the near-term inefficient use of cash that would result from a significant portion of the principal repayment (relating to 2023 Notes held via the Russian National Settlement Depository ( NSD )) being trapped in international clearing systems (with no clear prospect of such monies being returned to VEON). VEON and its legal advisors have spent significant time and efforts exploring potential options to avoid having cash trapped in the international clearing systems, but at present there does not appear to be a clearly viable path to avoid this unattractive outcome. At a time that, due to Russian Decree 430, the Group potentially can no longer rely on payments to the international clearing systems effectively being recognised by its Russian noteholders as a full discharge of the underlying liability, the proposed maturity extension will provide additional time for the impact of Decree 430 on VimpelCom and the Group (as set out in the Scheme documentation) to become clearer and for the Group to mitigate, where possible, the associated risk of double payments. The Scheme proposal would also provide time to progress our asset monetization strategy anchored by the sale of our Russian business (the VimpelCom Disposal ), as announced on 24 November 2022. We believe that the VimpelCom Disposal represents the single-most material deleveraging action available to VEON Holdings and increases the prospects of VEON regaining access to the international capital markets, and thereby refinancing its indebtedness, on commercially acceptable terms.

As set out more fully in the Scheme documents, in return for granting us with a modest extension, we have sought to compensate the 2023 Noteholders with the benefit of an amendment fee and a put right. As announced on 11 January 2023, the Company has further amended the terms of the proposal set out in the Scheme and entered into undertakings to vote in favour of the Scheme with certain 2023 Noteholders holding approximately 10.4% of the principal amount of the 2023 Notes. Each of these amendments improves the terms of the proposal for the benefit of the 2023 Noteholders.

If the Scheme fails, the directors of VEON Holdings will need to continue to assess the Company's solvency and liquidity position up to the original maturity date of the February 2023 Notes. Whilst VEON Holdings will have sufficient cash to pay the 2023 Notes on their original maturity dates, we cannot exclude the possibility that the directors may determine that the best action for VEON Holdings to take is not to pay on maturity while the double-payment risk continues. We consider that, by providing further runway to allow the sale of VimpelCom to complete, the Scheme will greatly reduce the risks of non-payment and impact on our stakeholders.

We are pleased that good progress has already been made in respect of the implementation of the Scheme (and strive to continue this progress). In particular, on 26 December, we announced that VEON Holdings was granted an OFAC License (if you would like to see a copy of the OFAC License, you can request a copy by email to bonds@veon.com). Following receipt of this license, VEON Holdings believes that no further licenses are required in order to permit eligible noteholders to vote on the Scheme. In addition, we are in active dialogue with the Netherlands Ministry of Finance and the UK Office of Financial Sanctions Implementation in respect of the licenses we have sought from those regulators, which will be required to implement the amendments contemplated by the Scheme.

Therefore in consideration of the steps taken above, we request your support and encourage you to vote in favour of the Scheme at the forthcoming scheme meeting. By doing so, you will provide us with crucial time to mitigate the risks of trapped cash and potential double-payment and to undertake the VimpelCom Disposal and our wider asset monetization programme

LINK:	https://www.veon.com/media/media-releases/2023/ceo-letter-to-2023-note...
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