(Reuters) – Flagging escalating fears it might default on some company debt, Russian e-commerce participant Ozon mentioned it has elevated its capital expenditure and seen free money move flip destructive because it seeks to go off provide chain interruptions.
Nasdaq-listed Ozon, buying and selling in whose shares was suspended on Feb. 28, warned of bond fee points in early March and has since entered into discussions with an advert hoc group of holders of its $750 million, 1.875% unsecured convertible bonds.
Late on Thursday, in a quarterly outcomes disclosure, Ozon mentioned a considerable portion of bondholders had been entitled to obtain principal and curiosity on Could 31 and that failure to pay by June 14 would place it in default.
Ozon, which has not been focused by Western sanctions, mentioned Russian capital controls and the ever-changing regulatory backdrop had been proscribing it from diverting funds from its Russian subsidiaries, creating the danger that it’ll have inadequate liquidity on the required time.
“It is very important perceive {that a} doable technical default on bonds doesn’t imply insolvency of the corporate,” Ozon mentioned on Friday, including that it deliberate to signal an settlement with bondholders on restructuring by year-end.
Ozon is one among a handful of Russian firms within the peculiar scenario of getting the funds, however being unable to pay. It mirrors the quandary dealing with the Russian authorities, which is on the cusp of being pushed right into a bond default by sanctions, not lack of money.
CAPEX JUMP
Whereas many Russian firms have shied away from reporting financials, Ozon mentioned its loss for the primary three months had widened to 19.1 billion roubles ($293.7 million), however its income was up 90% year-on-year to 63.6 billion roubles and gross merchandise worth (GMV) – a measure of on-line transactions volumes – jumped 139% to 177.4 billion roubles.
Free money move slid to destructive 46.9 billion roubles, for a number of causes together with “accelerated purchases of IT, warehouse and different tools to make sure uninterrupted provide.”
Throughout Russia’s extremely fragmented e-commerce market, there may be sturdy competitors for market share, mentioned Gazprombank TMT analyst Anna Kupriyanova.
“Firms with good funding, like these as diversified as Yandex (NASDAQ:) are in a greater place versus area of interest gamers like Ozon,” she mentioned. “This entire scenario will intensify consolidation of the market and I anticipate the most important 4 gamers to recover from 50% market share in a single to 2 years.”
($1 = 65.0330 roubles)
