VK Company Limited (LSE, MOEX: VKCO, hereinafter referred as “VK” or “the Company”), one of the largest Internet companies in the Russian-speaking Internet market, informs on the potential ramifications of the suspension of trading of Global Depositary Receipts representing interests in ordinary shares of the Company (the "GDRs").
On March 3, 2022, trading of the VK’s GDRs on the London Stock Exchange (“LSE”) was suspended by the exchange. It is currently unknown when trading in the GDRs will resume.
Under the terms of the Company’s USD 400mn 1.625 per cent Senior Unsecured Convertible Bonds due 2025 (“Bonds”), a “De-listing Event” occurs if, among other things, trading of the GDRs on the LSE Main Market is suspended for a period of 10 consecutive dealing days or more (the cut-off date falling in our case on Wednesday, March 16, 2022 inclusive).
If a “De-listing Event”, as defined in the terms and conditions of the Bonds, occurs, the Company is required to give the Trustee, the Principal Paying, Transfer and Conversion Agent and to the Bondholders a notice thereof within 2 London and Moscow Business Days following the occurrence of a “De-listing Event” and the bondholders will be entitled to require the Company to redeem their Bonds on the relevant “Put Date” at the principal amount together with accrued interest on the “Principal Amount”, which is the 14th calendar day after the last day of the “De-listing Event Period” (the 60-calendar day period commencing on the later of the date of the “De-listing Event” or the date on which a “De-listing Event Notice” thereof is given to bondholders).
A “Put Exercise Notice”, once delivered, shall be irrevocable and the Issuer shall redeem all Bonds the subject of the relevant “Put Exercise Notices” delivered as aforesaid on the “Put Date”, while such bondholders will not be able to vote and participate in any potential bond restructuring.
A “De-listing Event” would trigger the redemption rights described above. The Company estimated that it had cash and cash equivalents of approximately USD 190mn as of March 9, 2022. USD 140mn of this liquidity is held in foreign currency, including around USD 80mnheld in foreign currency outside Russia to support working capital of VK’s international businesses. Due to, among other things, uncertainty around the impact of the restrictions under the recently enacted Russian capital control and protection measures on the ability to transfer cash funds from the Company’s Russian subsidiaries to its foreign holding company, which is the issuer of the Bonds, and continuing multiple changes to the regulatory backdrop, it is possible that the Issuer will not have sufficient liquidity to fund the payments required for the redemption if most of the bondholders choose to exercise their redemption right.
Should a “De-listing Event” occur, the Company will continue acting in good faith and anticipates to engage into negotiations with bondholders to find a suitable solution in the given circumstances; however, there is no guarantee those would be successful. If the Company were unable to successfully negotiate with the bondholders, and fails to pay respective amount of principal in respect of the Bonds within three days of the due date or fails with respect to the payment of interest for a period of 14 days, an “Event of Default” under the terms and conditions of the Bonds would occur.
The Company intends to start negotiations with all Bondholders as soon as possible to discuss possible alternatives to the put option exercise and welcomes their outreach using the contacts below.
For further information please contact:
Phone: +7 495 725 6357 extension: 3434
Mobile: +7 905 594 6604
Mobile: +7 916 238 1297