Plagued by default fears, Russian e-commerce player Ozon boosts spending

(Reuters) – Flagging escalating fears it may possibly default on some company credit card debt, Russian e-commerce participant Ozon reported it has improved its money expenditure and seen absolutely free hard cash stream change unfavorable as it seeks to head off provide chain interruptions.

Nasdaq-outlined Ozon, investing in whose shares was suspended on Feb. 28, warned of bond payment concerns in early March and has considering that entered into conversations with an advert hoc group of holders of its $750 million, 1.875% unsecured convertible bonds.

Late on Thursday, in a quarterly benefits disclosure, Ozon claimed a considerable part of bondholders had been entitled to acquire principal and desire on May well 31 and that failure to shell out by June 14 would spot it in default.

Ozon, which has not been specific by Western sanctions, mentioned Russian capital controls and the ever-transforming regulatory backdrop ended up restricting it from diverting resources from its Russian subsidiaries, producing the danger that it will have inadequate liquidity at the required time.

“It is vital to realize that a doable specialized default on bonds does not signify insolvency of the organization,” Ozon stated on Friday, adding that it prepared to sign an agreement with bondholders on restructuring by yr-stop.

Ozon is 1 of a handful of Russian businesses in the peculiar condition of owning the funds, but remaining not able to spend. It mirrors the quandary dealing with the Russian governing administration, which is on the cusp of currently being pushed into a bond default by sanctions, not lack of hard cash.

CAPEX Bounce

Though several Russian organizations have shied absent from reporting financials, Ozon claimed its decline for the initially a few months experienced widened to 19.1 billion roubles ($293.7 million), but its income was up 90% calendar year-on-12 months to 63.6 billion roubles and gross items benefit (GMV) – a measure of on the net transactions volumes – jumped 139% to 177.4 billion roubles.

Free of charge dollars flow slid to damaging 46.9 billion roubles, for many good reasons like “accelerated purchases of IT, warehouse and other machines to assure uninterrupted provide.”

Throughout Russia’s hugely fragmented e-commerce market place, there is strong competitors for marketplace share, claimed Gazprombank TMT analyst Anna Kupriyanova.

“Companies with very good funding, like these as diversified as Yandex are in a better placement versus niche players like Ozon,” she mentioned. “This whole condition will intensify consolidation of the market and I count on the premier four players to get about 50% marketplace share in 1 to two years.”

($1 = 65.0330 roubles)

(Reporting by Reuters)

Simonne Stigall

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