VK hires advisers for proposal to holders of 1.625% convertibles

By Wendy Van Sickle

Columbus, Ohio, March 28 – Russia’s VK Co. Ltd. has hired financial advisers Aspring Capital and Serdika Financial Services to develop proposals to be made to holders of its $400 million 1.625% senior convertible bonds due 2025, according to a company update on Monday.

The company previously announced on March 17 that a put option would likely be made available to holders of the convertibles due to a “de-listing event.”

As background, the company’s Global Depositary Receipts have been suspended by the London Stock Exchange since March 3 and remain suspended.

The GDRs had not been trading for 10 consecutive days, as of March 16.

Under the indenture for the bonds, this constitutes a “de-listing” event and noteholders technically have the right to require the company to repurchase the bonds on the put date, 14 calendar days after the last day of the de-listing event period (the 60-calendar day period after the de-listing event). The company says the put date is calculated as May 31.

The company has said it is working to develop a proposal to the bondholders to address the de-listing event and possible alternatives to the put option exercise.

Once bondholders exercise their put option, the notice is irrevocable and they will not be able to vote and participate in any potential bond restructuring, VK said.

The company noted earlier in the month that it has around $190 million of liquidity as of March 9. A $140 million portion of the liquidity is held in foreign currency, including around $80 million held in foreign currency outside Russia to support the working capital of VK’s international business.

It is possible the company will not have sufficient liquidity to fund the payments required for the redemption if most of the bondholders choose to exercise their redemption right.

If the company is unsuccessful in negotiating with the bondholders, an event of default could occur.

Bondholders are welcome to reach out to the company to discuss alternatives (Tatiana Volochkovich: +7 495 725 6357 x3434, t.volochkovich@vk.team).

VK is one of the largest internet companies in the Russian-speaking market. The company is based in St. Petersburg. The company was previously known as Mail.ru Group Ltd.

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