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Why Is Veon (VEON) Stock Up Today?

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Shares of Veon (NASDAQ:VEON) stock are soaring higher today by over 40% as of this writing. The company operates as an internet services provider that draws revenue from both Russia and Ukraine.

a visual representation of the internet connections crisscrossing the sky above a city

Source: Shutterstock

As a result, investors were concerned that the company would take a hit from the Russia-Ukraine conflict and subsequent sanctions. However, Veon released a statement today that seeks to relieve VEON stock investors’ fears.

Here’s what investors should know about the company moving forward.

Why Is VEON Stock Up Today?

In the statement, Veon announced that it would not be affected by European Union (EU) sanctions against two Russian billionaires affiliated with the company. The two billionaires, Mikhail Fridman and Petr Aven, own stakes in VEON stock through an entity called LetterOne. Fridman and Aven own a “less than 50% interest” in LetterOne. What’s more, both Fridman and Aven have stepped down from the LetterOne board of directors.

LetterOne owns “47.85% of common and voting shares” in VEON stock. For any shareholders concerned about the voting rights that the two billionaires have, Veon stated that Fridman and Aven don’t own any voting rights in VEON stock “outside of their interest in LetterOne.”

On top of this news, Veon also recently cleaned up its balance sheet. Using capital from its revolving credit facility (RCF), the company paid off $417 million worth of notes that matured on March 1. Post-payment, it now has $820 million remaining in its RCF. The next maturation date for Veon notes won’t occur until February of next year. When that happens, the company will have to pay off $529 million worth of maturing notes.

What’s Next for Veon?

Despite the 40%-plus gain in VEON stock today, shares of the company are still down more than 75% year-to-date (YTD). While the EU sanctions may not directly affect Veon, geopolitical tensions have still hammered the connectivity provider. Furthermore, a decline in the value of the Russian ruble will directly affect the company’s revenue.

On the bright side, Veon CFO Serkan Okandan disclosed that the company has access to capital that isn’t in rubles. The CFO added that this capital “will allow [the company] to maintain a prudent liquidity position in these times of macroeconomic uncertainty.”

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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