DEFM14A: Cohen Circle to Merge with Kyivstar Group Ltd., Bringing Ukrainian Telecom Leader to Nasdaq

Cohen Circle Acquisition Corp. I is set to merge with Kyivstar Group Ltd., a leading Ukrainian telecommunications and digital services provider, in a business combination valued at approximately $2.21 billion, aiming for a Nasdaq listing under the symbol KYIV.

Summary

• Cohen Circle Acquisition Corp. I (SPAC) is merging with Kyivstar Group Ltd. (PubCo), which will become the parent company of VEON Holdings B.V. and its Ukrainian subsidiaries (Kyivstar).
• The business combination is valued at approximately $2.21 billion (Closing Equity Value).
• The transaction involves the sale of VEON Holdings' equity to Kyivstar Group Ltd. in exchange for newly issued common shares and a Seller Loan Note, followed by a merger of Cohen Circle into a Kyivstar Group Ltd. subsidiary.
• Kyivstar Group Ltd. intends to list its common shares and warrants on Nasdaq under symbols KYIV and KYIVW, respectively, upon closing.
• The transaction is subject to shareholder approvals (Cohen Circle EGM on August 11, 2025), regulatory approvals, and a minimum cash condition of $50 million in the Trust Account.
• Kyivstar reported revenue of $919 million and profit of $283 million for the year ended December 31, 2024, with Adjusted EBITDA of $515 million.
• For the three months ended March 31, 2025, Kyivstar reported revenue of $255 million and profit of $44 million, with Adjusted EBITDA of $140 million.
• VEON Ltd. will own a minimum of 80% of Kyivstar Group Ltd.'s equity post-closing, making it a controlled company.
• Sponsors of Cohen Circle will hold 2.2% of Kyivstar Group Ltd. shares post-combination (assuming no redemptions), with their initial investment of $25,000 for founder shares now valued at $87.5 million.

Sentiment

Score: 4

Explanation: While Kyivstar demonstrates impressive operational resilience, market leadership, and strategic growth initiatives in digital services, the inherent and pervasive risks stemming from the ongoing war in Ukraine are substantial. These include direct operational disruptions, potential nationalization, severe currency volatility, and the 'going concern' emphasis from auditors. The transaction structure also introduces significant dilution for existing SPAC shareholders and highlights potential conflicts of interest for the sponsors. Given the high geopolitical uncertainty, the overall sentiment is cautious, as the positive financial metrics are overshadowed by the severe geopolitical and regulatory risks.

Positives

• Kyivstar is Ukraine's leading mobile communication provider by subscribers and broadband services by access lines, holding over 47% mobile market share and 14.1% fixed broadband market share as of December 31, 2024.
• The company demonstrates a strong financial profile with consistent profitability, reporting a 31% profit margin and 56% Adjusted EBITDA Margin for the year ended December 31, 2024.
• Significant investments have been made in network infrastructure and resilience, including approximately $45.3 million in 2024 for reconstruction and the installation of 2,600 generators and 176,000 additional batteries.
• Kyivstar has successfully expanded into digital services, with digital services revenue increasing by 101% from $10.8 million in 2023 to $21.8 million in 2024, driven by platforms like Helsi, Kyivstar.Tech, and Kyivstar TV.
• The acquisition of Uklon, a leading ride-hailing and delivery platform, for $155.2 million in April 2025, marks a strategic expansion into new digital consumer services.
• The company's multiplay customer base has grown significantly, reaching approximately 6.1 million customers as of December 31, 2024, a three-fold increase from 2.1 million in 2020, contributing to ARPU growth.
• Strategic partnerships, such as the agreement with Starlink for direct-to-cell satellite connectivity, are expected to enhance network resilience and service offerings.
• Kyivstar and VEON have announced a joint intention to invest $1 billion in Ukraine between 2023 and 2027, signaling long-term commitment and potential for growth.
• The management team is experienced and has demonstrated resilience in navigating challenging operating environments, maintaining an 86% employee engagement rate in 2024.
• Northland Capital Markets provided a fairness opinion, affirming the financial fairness of the transaction and that Kyivstar Group meets the 80% net assets test for the SPAC merger.

Negatives

• The ongoing war in Ukraine has adversely impacted operations, leading to a loss of up to 3.1 million mobile subscribers from January 2022 to December 2024 due to migration and territorial losses.
• A widespread external cyber-attack in December 2023 caused temporary service disruptions and resulted in an estimated $23 million revenue impact in 2023 and $46 million in 2024 due to customer appreciation programs.
• There is a risk of nationalization or confiscation of assets due to existing and amended Ukrainian nationalization laws, particularly concerning perceived ties of VEON's shareholders to sanctioned individuals.
• Restrictions applicable to foreign-owned companies in Ukraine, including martial law and currency controls, have limited the upstreaming of dividends and making certain payments abroad.
• The company has suffered reputational harm due to the association of certain beneficial owners of VEON's shareholder (LetterOne) with sanctions, leading some multinational companies to cease transacting business.
• The telecommunications industry is highly capital intensive, requiring substantial and ongoing expenditures, which may be challenging to fund given the war and limited access to capital markets.
• Kyivstar's revenue performance can be unpredictable as approximately 76% of its B2C mobile customers are on prepaid plans, lacking long-term fixed contracts.
• Cohen Circle public shareholders will experience immediate and material dilution upon closing, with their ownership potentially reducing from 10.1% to 2.2% in a maximum redemption scenario.
• The financial interests of Cohen Circle's Sponsors and directors, including the significant increase in value of their founder shares, may conflict with the interests of public shareholders.
• Kyivstar Group Ltd. will be a 'controlled company' by VEON post-merger, potentially limiting the protections afforded to minority shareholders under Nasdaq corporate governance standards.
• The company's status as an 'emerging growth company' with reduced public company reporting requirements may make its shares less attractive to some investors.

Risks

• Ongoing war in Ukraine: Disruptions to business, financial conditions, and results of operations due to increased operating costs, physical damage to network infrastructure and assets, and potential seizure/appropriation of assets in Russian-occupied territories.
• Going Concern: Independent auditors included a going concern emphasis paragraph due to the unknown duration and extent of the ongoing war in Ukraine and potential further sanctions, raising substantial doubt about the company's ability to continue as a going concern.
• Sanctions & Reputational Harm: Association with sanctioned individuals (Mikhail Fridman, Petr Aven, Andrey Kosogov of LetterOne) may lead to reputational damage, self-imposed sanctions by business partners, and challenges with international financial institutions.
• Nationalization Risk: Potential for nationalization or confiscation of operations and assets due to existing or amended Ukrainian nationalization laws, especially concerning Russian ownership ties.
• Corporate Rights Freezing: Ukrainian courts previously froze corporate rights in Kyivstar and its subsidiaries, which, though lifted, indicates ongoing risk of similar actions.
• Martial Law Powers: Ukrainian authorities may further extend or use powers under martial law in ways that adversely affect operations and financial condition, including restrictions on foreign-owned companies.
• Customer Demand Shifts: Changes in customer demand due to migration and population shifts caused by the war, potentially leading to subscriber loss and reduced ARPU.
• Roaming Policies: EU policies regulating roaming charges for Ukrainians (e.g., Roam Like at Home) may continue to impact revenue and profit margins from international mobile termination rates.
• Highly Competitive Markets: Difficulty expanding customer base or retaining existing customers due to intense competition, potential consolidation among competitors, and aggressive marketing schemes.
• Frontier Market Risks: Investing in Ukraine and Uzbekistan (frontier markets) carries greater risks, including political and economic instability, regulatory and legal uncertainty, social unrest, and conflict.
• Technological Obsolescence: Inability to keep pace with rapidly evolving technology, industry standards, and service demands (e.g., 5G deployment, equipment upgrades).
• Spectrum & License Costs: High acquisition and deployment costs for spectrum and licenses, and the risk of non-renewal or less favorable terms.
• Capital Intensive Industry: Requires substantial and ongoing capital expenditures, with uncertainty in funding due to the war and limited access to capital markets.
• Cyber-attacks & System Disruptions: Continuous exposure to cybersecurity threats (e.g., December 2023 attack) leading to service degradation, data breaches, financial losses, and reputational harm.
• Foreign Currency Exchange Risk: Exposure to volatility in Ukrainian hryvnia against USD, impacting reported results and increasing costs for hard currency-denominated expenditures.
• Unpredictable Revenue: Majority of customers on prepaid plans, leading to unpredictable revenue performance.
• Strategic Partnership Risks: Disagreements with partners, investigations, sanctions, or non-compliance by partners could adversely affect business.
• Key Personnel Retention: Difficulty retaining or motivating key personnel due to intense competition, war-related mobilization, and adverse publicity.
• Digital Offering Success: Core growth strategies (digital offerings, 4G connectivity) may not be successful, with risks including high transaction costs for acquisitions and inability to recover investments.
• Regulatory & Legal Uncertainty: Subject to extensive and sometimes conflicting laws, potential for unanticipated outcomes from regulatory reviews, fines, and license revocations.
• Tax Claims & Audits: Exposure to tax claims and repeated tax audits, with unpredictable outcomes and potential for additional liabilities.
• Banking & Currency Control Restrictions: Underdeveloped banking systems and martial law restrictions limiting international transfers and dividend upstreaming.
• SPAC Operating History: Cohen Circle has no operating history or revenues prior to the merger.
• Sponsor Influence: Sponsors' financial interests may conflict with public shareholders' interests, potentially influencing the decision to approve the Business Combination.
• Transaction & Transition Costs: Significant non-recurring costs incurred for the Business Combination and operating as a public company.
• Trust Account Claims: Third parties may bring claims against Cohen Circle if the business combination is not completed, potentially reducing funds in the Trust Account.
• Dilution from Merger: Immediate and material dilution for Cohen Circle public shareholders who do not redeem their shares.
• No Underwriter Review: Lack of independent third-party underwriter review in the de-SPAC transaction compared to a traditional IPO.
• Nasdaq Listing Risk: No assurance that Kyivstar Group Ltd. Common Shares or Warrants will be approved for listing on Nasdaq.
• Controlled Company Status: VEON's majority ownership means Kyivstar Group Ltd. will be a controlled company, potentially limiting minority shareholder protections.
• Emerging Growth Company Status: Reduced public company reporting requirements may make shares less attractive to investors.
• Limited Public Company Experience: Kyivstar Group Ltd. management has limited experience operating a public company.
• Securities Litigation: Potential for securities class action and derivative lawsuits.
• Tax Consequences of Merger: Uncertainty regarding U.S. federal income tax consequences for U.S. holders, especially concerning PFIC rules and Section 367(a).
• Dividend Limitations: Various factors may limit Kyivstar Group Ltd.'s ability to declare and pay dividends, including currency restrictions.
• Market Price Volatility: Share price may be volatile or decline regardless of operating performance due to various factors, including geopolitical instability.
• Future Resales: Sales of substantial amounts of shares by Sponsors and Seller after lock-up expiration could cause price decline.

Future Outlook

Kyivstar Group Ltd. intends to apply for Nasdaq listing under symbols KYIV and KYIVW upon closing. Kyivstar and VEON plan a joint investment of $1 billion in Ukraine between 2023 and 2027, focusing on network development, resilience, technological leadership, digitalization, and strategic acquisitions, which is expected to keep capital expenditures elevated. The company anticipates launching Starlink direct-to-cell services with SMS and OTT messaging in Q4 2025, with future expansion to voice and data. Management aims to increase ARPU by introducing premium services and upselling, expecting it to reach levels comparable to Central and Eastern European nations with economic recovery. Kyivstar also plans to actively participate in upcoming spectrum auctions and implement new short-term and long-term incentive plans for employees.

Management Comments

• "The Cohen Circle Board recommends that its shareholders vote FOR the proposals described in the accompanying proxy statement/prospectus."
• "The Cohen Circle Board concluded that a transaction with Kyivstar Group Ltd. would present the most attractive opportunity to maximize value for Cohen Circle's shareholders."
• "Management has demonstrated resilience in the face of a challenging wartime environment by continuing to deliver strong results, making investments in network quality and acquiring and integrating a portfolio of B2B and B2C products and services."
• "We believe our diverse multiservice product offering, combined with our high network reliability, fosters customer loyalty and supports our premium pricing strategy."
• "We believe the average mobile ARPU in Ukraine is relatively low and has the potential to increase to levels comparable to ARPU levels in Central and Eastern European nations."
• "As the only Ukrainian company to be listed in the U.S., we expect to provide a unique opportunity for international investors to participate in the country's recovery through investment in Kyivstar."
• "Our commitment to strategic growth continued with our acquisition of LanTrace... In April 2025, we acquired 97% of the shares in Uklon..."
• "VEON's priority is to protect the safety and well-being of our employees and their families."
• "Management actively monitors the Company's liquidity position... and should they reach a level considered at-risk, management will take actions to ensure our liquidity position is sufficient..."
• "Management is engaging with authorities in Ukraine to address any concerns they have about the ownership and management of Kyivstar and to provide all necessary assurances to confirm that Russian nationals... do not participate in the management of Kyivstar nor are they able to derive any benefits from VEON's assets in Ukraine."

Industry Context

The telecommunications industry is undergoing rapid technological evolution and shifting service demands, with a trend towards digital transformation and multiplay offerings. Kyivstar, as Ukraine's leading mobile and fixed broadband provider, is actively participating in this trend by expanding its digital services portfolio (e.g., digital health, ride-hailing, digital TV) and investing in 4G/LTE networks and future 5G readiness. The Ukrainian market, as a frontier market, presents unique challenges due to the ongoing war, including infrastructure damage, population displacement, and economic volatility. This environment intensifies competition and regulatory uncertainty, but also creates opportunities for consolidation in fragmented segments like fixed broadband. Kyivstar's strategy to leverage its strong customer base and network reliability to cross-sell digital services aligns with global telecom operators' efforts to increase ARPU and customer engagement beyond traditional connectivity.

Comparison to Industry Standards

• Kyivstar holds over 47% of the mobile market share in Ukraine by number of customers as of December 31, 2024, leading its main competitors Vodafone (15.8 million customers) and Lifecell (9.5 million customers).
• Kyivstar is the leading fixed broadband provider in Ukraine by number of access lines, with over 1.1 million customers and an estimated 14.1% market share as of December 31, 2024, in a highly fragmented market with almost 2,000 operators.
• Kyivstar's average monthly mobile ARPU of $3.00 in 2024 is significantly lower than the average monthly ARPU of $10.7 across Mobile Network Operators (MNOs) in selected Central and Eastern European countries, indicating substantial potential for ARPU growth.
• The company's employee engagement rate of 86% in 2024, as per a third-party survey, is considered high, surpassing its 80% rate in 2020 and suggesting strong internal cohesion despite external challenges.
• Kyivstar's cybersecurity policy aligns with ISO 27001 and NIST2, demonstrating adherence to international information security management standards, particularly critical given the increased cyber-attack risks in Ukraine.

Management Changes

Corporate Governance

Legal Proceedings

• A criminal proceeding by the Security Service of Ukraine (SSU) in which Kyivstar has been identified as the victim of the December 2023 cyber-attack remains open as of the date of the proxy statement/prospectus.
• A claim filed in 2016 by the Ukraine Tax Authority alleging an additional charge of taxes and penalties amounting to approximately $33.9 million for the years 2009 to 2014, related to a contractual relationship with Private Enterprise Wholesale Company Elbrus, is pending in the court of first instance, awaiting the outcome of a criminal case against Elbrus's ex-CEO.
• Ukrainian courts previously froze all corporate rights of Mikhail Fridman in 20 Ukrainian companies, including 47.85% of Kyivstar, 100% of Ukraine Tower Company, 100% of Kyivstar.Tech, and 69.99% of Helsi, from October 6, 2023, through November 29, 2024. This freeze was subsequently lifted on November 29, 2024.
• In April 2024, the Ukrainian custodian of VEON's shares in Kyivstar marked all VEON's shares (including those not subject to the freezing order) as non-voting, an issue that is ongoing as of the date of the proxy statement/prospectus.
• In September 2024, the Ministry of Justice of Ukraine filed a suit with the Ukraine High Anti-Corruption Court seeking confiscation of shares in various companies related to Mikhail Fridman, Petr Aven, and Andrey Kosogov, though none of the shares reported to be targeted are directly related to VEON or Kyivstar.
• The Draft Law on Amendments to the Criminal Code of Ukraine and the Criminal Procedure Code of Ukraine and the Law of Ukraine On Sanctions, regarding the establishment of liability for violation of special economic and other restrictive measures, was approved by the Ukrainian Parliament in the first reading on June 3, 2025, and is subject to a second reading.

Related Party Transactions

• **Ukraine Tower Company (UTC) Agreements**: Kyivstar utilizes network infrastructure from UTC, a wholly owned subsidiary of VEON. Kyivstar is the anchor tenant for almost all UTC sites, paying $61 million in fees to UTC in 2024 (vs. $50 million in 2023). Kyivstar also provides shared services to UTC and leases IT equipment, vehicles, and office facilities. UTC paid Kyivstar approximately $10.8 million in 2024 (vs. $2.9 million in 2023) under a Framework Sale and Purchase Agreement for equipment.
• **General Services Agreement with VEON**: VEON provides Kyivstar with various general support services (technical, commercial, legal, tax, treasury, HR). This agreement was extended until December 31, 2028. Kyivstar settled approximately $2.6 million with VEON using credit funds in 2024, but paid nothing under this agreement in 2022, 2023, and 2024.
• **Agency and Services Agreement with VEON Wholesale Services B.V.**: This agreement for international roaming and telecommunications services was terminated on March 31, 2024. Kyivstar paid VEON approximately $4.4 million in 2024 under this agreement.
• **Loans from VEON Amsterdam B.V.**: Kyivstar has a loan receivable from VEON Amsterdam B.V. amounting to $369 million as of March 31, 2025, intended to cover estimated shortfalls in cash to repay 2025 Notes.
• **Investment in VEON Ltd. shares**: VEON Holdings B.V. purchased VEON Ltd. ordinary shares as part of VEON's share buyback program, with $8 million held as of December 31, 2024. These shares were subsequently transferred to VEON Amsterdam B.V. in March 2025.
• **Promissory Note (Cohen Circle)**: Cohen Circle issued a non-interest bearing promissory note to Cohen Circle Sponsor I, LLC for up to $2,000,000, due on the Closing Date.
• **Administrative Support Agreement (Cohen Circle)**: Cohen Circle pays an affiliate or designee of the Sponsor $25,000 per month for office space, utilities, and shared personnel support services.
• **Service Agreement (Cohen Circle)**: Cohen Circle pays its Chief Financial Officer $12,500 per month.
• **Related Party Loans (Cohen Circle)**: The Sponsor or an affiliate of the Sponsor has committed to loan Cohen Circle up to $250,000 in Working Capital Loans, with the potential for up to $2,000,000 of such loans to be convertible into units.
• **Sponsor Agreement**: The Sponsors have agreed to vote their shares in favor of the Business Combination, not redeem shares, and waive certain anti-dilution provisions. This agreement also includes the forfeiture of 2,155,000 SPAC Class B Ordinary Shares and 238,333 SPAC Placement Warrants, and imposes lock-up and vesting conditions on New PubCo shares issued to them.
• **Seller Lock-up Agreement**: The Seller's New PubCo shares will be subject to a lock-up period of 180 days following the Closing, with potential for earlier release under specific conditions.
• **Non-Redemption Agreements**: Cohen Circle and Kyivstar Group Ltd. entered into agreements with unaffiliated third parties who committed not to redeem certain Cohen Circle Class A Ordinary Shares in exchange for New PubCo Common Shares.

Stakeholder Impact

• **Shareholders (Cohen Circle Public)**: Will experience immediate and material dilution upon closing, with their ownership potentially decreasing from 10.1% to 2.2% in a maximum redemption scenario. Their ability to influence corporate matters will be limited due to VEON's majority ownership.
• **Shareholders (Sponsors)**: Will hold 2.2% of Kyivstar Group Ltd. shares post-combination, with a substantial increase in the value of their initial investment ($25,000 investment valued at $87.5 million). Their financial interests may conflict with those of public shareholders.
• **Shareholders (VEON)**: Will maintain majority ownership (at least 80%) and control over Kyivstar Group Ltd., allowing significant influence over corporate matters and strategic direction.
• **Employees (Kyivstar)**: Management prioritizes their safety and well-being amidst the war, providing emergency support, flexible work arrangements, and psychological support. The company reports high employee engagement (86%). However, there is a risk of loss of key personnel due to mobilization efforts related to the war.
• **Customers (Kyivstar)**: Have been impacted by service disruptions (e.g., December 2023 cyber-attack) but have also benefited from customer appreciation programs and initiatives like 'Roam Like at Home.' Ongoing network resilience investments aim to improve service quality and availability.
• **Suppliers**: Some multinational companies and firms have expressed hesitancy or unwillingness to continue business with Kyivstar due to perceived ties to Russia, potentially impacting supply chain and access to critical equipment.
• **Creditors**: The Trust Account funds are primarily protected for public shareholders, but third parties may bring claims against Cohen Circle if the business combination is not completed. VEON Holdings has repaid significant bonds prior to closing, reducing debt obligations.
• **Ukrainian Government/Economy**: Kyivstar is a major social sponsor and investor in Ukraine, with VEON and Kyivstar jointly intending to invest $1 billion. The company's operations are considered critical infrastructure, contributing to the country's economic recovery and digitalization efforts.

Next Steps

• Cohen Circle will hold an extraordinary general meeting (EGM) on August 11, 2025, to obtain shareholder approvals for the Business Combination.
• Kyivstar Group Ltd. intends to apply to list its common shares and warrants on Nasdaq under symbols KYIV and KYIVW upon closing of the Business Combination.
• Kyivstar and VEON plan to invest $1 billion in Ukraine between 2023 and 2027, focusing on network development, resilience, technological leadership, digitalization, and strategic acquisitions.
• Kyivstar anticipates launching Starlink direct-to-cell services with SMS and OTT messaging functionality in Q4 2025, with plans to expand to voice and data in later stages.
• Kyivstar plans to actively participate in upcoming spectrum auctions to expand network capacity.
• Kyivstar Group Ltd. expects to implement a cash-based, short-term incentive plan (STIP) and a share-based, long-term incentive plan (LTIP) for employees.
• The Demerger of VEON Holdings B.V. was completed on April 8, 2025, paving the way for the proposed business combination.
• VEON Holdings B.V. repaid its April 2025 Bonds ($472 million) on April 9, 2025, and June 2025 Bonds ($100 million) on June 18, 2025.
• The 2027 Bonds are to be transferred from VEON Holdings to VEON MidCo as part of the Demerger.
• Kyivstar is continuing to work with its local custodian to remove any remaining restrictions in respect of corporate rights after the unfreezing decision.
• The Draft Law on Amendments to the Criminal Code of Ukraine and the Criminal Procedure Code of Ukraine and the Law of Ukraine On Sanctions is subject to a second reading in Parliament.

Key Dates

Recommendation

While Kyivstar demonstrates impressive operational resilience, market leadership, and strategic growth initiatives in digital services, the inherent and pervasive risks stemming from the ongoing war in Ukraine are substantial. These include direct operational disruptions, potential nationalization, severe currency volatility, and the 'going concern' emphasis from auditors. The transaction structure also introduces significant dilution for existing SPAC shareholders and highlights potential conflicts of interest for the sponsors. Given the high geopolitical uncertainty, the stock is a 'hold' for seasoned investors. It offers long-term recovery potential tied to Ukraine's future stability and Kyivstar's strong market position, but the immediate risks are too significant for a 'buy' recommendation, and the underlying business strength prevents a 'sell.' Investors should monitor the geopolitical situation and the company's ability to mitigate war-related impacts.

Keywords

SPAC, Business Combination, Merger, Telecom, Ukraine, Digital Services, Kyivstar, VEON, Nasdaq Listing, Emerging Markets, Frontier Markets, Cybersecurity, Nationalization Risk, SEC Filing, DEFM14A, Special Purpose Acquisition Company, Telecommunications, Mobile Network Operator, Broadband, Digital Health, Ride-hailing, Corporate Governance, Risk Factors, Financial Performance, Shareholder Approval, Trust Account, Dilution, Sanctions, Capital Raise