“Yandex” figured out how to redeem their debts at a big discount

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Yandex reached an agreement with the committee of holders of its bonds on the scheme of their redemption. The company offers to pay $140,000 in cash and 957 own shares for each portion of bonds worth $200,000. In fact, this means buying back the debt at a 20% discount.

Agreement between Yandex and the committee of bondholders

Yandex (the owner of the Russian Yandex) announced that it had reached an agreement with a committee of its bondholders to settle the issue with the company’s $1.25 billion bonded loan. This loan was to be repaid in 2025.

However, since February 28, 2022, trading in shares of Russian companies has been suspended on the American and British stock exchanges. Among others, trading in Yandex shares was suspended on the American Nasdaq stock exchange. As a result, bondholders were able to demand their early redemption.

Yandex initially warned that the company had no opportunity to repay this loan ahead of schedule. After that, a committee of bondholders was formed to negotiate with the company, with Houlihan Lokey as financial advisor and Well, Gotshal & Manges as legal advisor. Initially, Yandex agreed with the bondholder committee to extend the term for presenting securities for early redemption from May 3 to June 7, 2022, then this period was extended until July 6.

How much Yandex will pay for the redemption of its own debts

The current arrangement assumes that Yandex will buy back its bonds. For each bond worth $200,000, the company will pay $140,000 in cash and 957 of its Class A shares, which have one vote per security.

Yandex has agreed with a committee of its bondholders that it will pay for each of their portions worth $200,000 with a 20% discount

Now Yandex shares are traded on the Moscow Exchange at a price of 1.4 thousand rubles. for one paper. Accordingly, the market value of the block of shares that Yandex will transfer in exchange for its bonds worth $200,000 is 1.34 million rubles. According to the Central Bank rate, this is $23,000.

At the Nasdaq exchange, the last trading in Yandex shares at the end of February ended at $20.3. Accordingly, the market value of each portion of Yandex shares that the company is ready to transfer in exchange for its debts is $19.4 thousand.

Thus, Yandex is ready to pay approximately $160,000 for each portion of its bonds worth $200,000 in monetary terms. That is, the company buys back debts at a 20% discount.

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Yandex assures that the cash component of its payments for its bonds will be financed by commercial loans, which are fully compliant with Russian, US, UK, EU and UN laws.

If Yandex is able to purchase at least 75% of its bonds under the scheme described above, then the company will be able to buy the rest of the bonds on similar terms.

Problems with the guarantor bank

Yandex also reported that the American bank BNY Mellon Corporate Trustee Services, acting as trustee for this bonded loan, will no longer be able to perform its functions. This is due to new restrictions imposed by the US Treasury on the provision of such services to Russian persons.

Issues with VK and Ozon bonds

Recall that other Russian Internet companies faced a similar situation, whose shares were traded on Western stock exchanges and which had bonded loans. VK holding has a $400 million bond issue maturing in 2025. Internet retailer Ozon has a $750 million bond issue maturing in 2026.

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Import substitution

In both cases, bondholders were able to demand their early redemption due to the suspension of exchange listings. At the same time, both companies do not have the opportunity to redeem their bonds ahead of schedule and have begun negotiations with specially created committees of creditors. In the case of Ozon, BNY Mellon Corporate Trustee Services also ceased to act as trustee for the bond issue.

Igor Korolev

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