“Yandex” agreed with the owners of bonds and will be able to avoid default

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The owners of nearly 85% of Yandex’s bonds have agreed to the company’s proposed restructuring scheme: the company will pay for each $200,000 worth of bonds in cash in the amount of $140,000 and 957 of its own shares. This implies a discount of approximately 20%.

Yandex and the agreement with bondholders

Yandex (the owner of the Russian Yandex) announced that it had reached an agreement with the owners of 84.9% of its bonds on the terms of their restructuring. This is a $1.25 billion bond issue maturing in 2025.

Earlier, Yandex had already agreed with a specially created committee of bondholders on a restructuring scheme: for each portion of bonds worth $200,000, Yandex will pay $140,000 in cash and transfer 957 class A shares of its own (having one vote per security).

Now the majority of bondholders have agreed with the proposed scheme. The deal is scheduled to close no later than June 24, 2022. Immediately after that, Yandex intends to transfer the number of shares due to the bondholders. To transfer the cash component, Yandex intends to raise debt financing that will comply with the laws of Russia, the United States, the European Union, the United Kingdom and the United States.

Earlier, Yandex reported that if the proposed restructuring scheme is approved by the owners of at least 75% of the total number of bonds, the company will be able to buy the remaining bonds on similar terms.

What caused the problem with bondholders

Yandex is listed on the American Nasdaq exchange. However, on February 28, 2022, trading in Yandex shares, as well as trading in shares of other Russian companies on Western stock exchanges, was suspended.

As a result, in accordance with the terms of the bonded loan, bondholders have the right to demand their early redemption. The company immediately repaid that the company did not have the possibility of early repayment, which could lead to default. After that, negotiations began with a committee of bondholders, whose legal advisor is Weil, Gotshal & Manges, financial – Houlihan Lokey EMEA.

Another problem was the fact that the American bank BNY Mellon Corporate Trustee Services, acting as trustee for this bond issue, can no longer perform its functions. This is due to the restrictions imposed by the US Treasury on the provision of such services to Russian persons.

Why bondholders agreed to Yandex’s offer

On February 28, trading in Yandex shares on the Nasdaq stock exchange stopped at $20.3 per share. Accordingly, the market value of each portion of the shares that the company intends to transfer in exchange for its bonds is $19.4 thousand.

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On the Moscow Exchange, Yandex shares are currently traded in the region of 1.41 thousand rubles. for one paper. This means that the market price of each portion of shares transferred by the company is 1.35 thousand rubles. Based on the current exchange rate of the Central Bank 56.66 rubles. for $1, this amount is equivalent to $23.8 thousand.

Thus, bondholders will receive cash and shares worth about $160,000 for each of their $200,000 package. This implies a 20% discount.

According to the executive director of the capital market department of IC “Univer Capital” Artem Tuzov, bondholders agreed to the scheme proposed by Yandex, since the bankruptcy of companies became an alternative to it. And under sanctions restrictions, bondholders could not get anything from this, the analyst believes.

Igor Korolev

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