Ozon announces terms for bond restructuring

Cypriot Ozon Holdings PLC (the parent company of the Ozon marketplace) has agreed on the terms of the restructuring of its convertible bonds, the company said in a message to RBC. The company offered to redeem these securities ahead of schedule. If the bondholder chooses payments in rubles, then the payment will be 85% of the face value, if in dollars, then up to 67%. Payments will include interest accrued up to 24 August.

To receive payments in dollars, Ozon will need to transfer funds from its Russian divisions to the Cypriot company. According to an Ozon representative, these transactions have already received permission from the Russian Ministry of Finance, but it will still be necessary to coordinate them with the regulatory authorities of the UK and Cyprus.

The vote on the restructuring will take place on October 17. A positive decision will be made if at least 75% of all holders vote for it, provided that two-thirds of the total number of bond holders participated in the vote. Ozon noted that holders of 35.9% of the bond issue have already agreed to these conditions. “We expect that the proposed terms of the restructuring will be of interest to other holders and they will join the vote,” an Ozon spokesman said.

Holders of securities who disagree with the proposed terms or those who for some reason did not vote will be able to receive the proposed payment within a year, but only in dollars.

US residents will only be able to receive payments in dollars, while sanctioned investors will not receive any payments, the report says.

Why was restructuring necessary?

Ozon issued $750 million in bonds in February 2021. Initially, their repayment was scheduled for 2026. The papers could be converted into American Depository Receipts (ADS) traded on the American NASDAQ exchange. However, a few days after the start of a special military operation in Ukraine, NASDAQ suspended trading in Ozon receipts after the bank owned by this company fell under US sanctions. According to the terms, if trading in converted bonds is not resumed after seven or more working days, their holders have the right to demand early repayment of the debt. However, on March 1, Ozon issued a statement to investors that if there is a call to buy the bonds, the company will face a technical default, since the Cypriot arm of the group must make payments,

The right to demand early redemption of Ozon bonds came on March 8, but the technical default did not happen. The bondholders created an initiative group and negotiated with company representatives. On June 1, Ozon announced that it had entered into an agreement with a group of Russian and foreign bondholders to facilitate the restructuring (the document was then signed by holders of 35.9% of the bond issue). They agreed not to take any enforcement action against Ozon due to a possible technical default. The agreement was extended several times, the last term ended on September 23.

In early August, it became known that Ozon, along with Yandex and VK, which faced a similar problem, received a preferential loan from the government for a total of 130 billion rubles. to fulfill obligations to bondholders. The terms of the loan, as well as how the specified amount was distributed between the companies, were not disclosed. In a statement on the terms of the restructuring, Ozon indicated that it would make the repayment from its own funds.