JP Morgan snubs advisory role on Russia’s Yandex debt talks

Yandex is the first Russian company with debt issued abroad to trigger a so-called delisting event, allowing bondholders to request repayment

Yandex listed on the Nasdaq stock exchange in New York in May 2011. Reuters

JP Morgan Chase turned down a role to advise Russian search engine Yandex on a potential debt restructuring exercise after taking part in initial discussions with a group of the company’s bondholders.

The decision comes as Yandex faces the risk that investors holding $1.25 billion of the company’s debt will demand to be repaid after a suspension in trading of its US-listed shares.

The company does not have enough money to redeem the notes in full, it said last week.

During initial discussions over the company’s financial situation, Yandex bondholders were told that JP Morgan and US law firm Latham & Watkins participated along with the Russian company, according to sources.

“Following talks at the weekend, we decided not to be involved in this potential restructuring,” a spokesman for JP Morgan said on Wednesday in response to questions from Bloomberg.

A Latham representative did not respond to requests for comment. On Wednesday, the firm published a statement condemning the war in Ukraine and announcing its intention to wind down its presence in Russia. The release did not address any specific engagements with clients.

Holders of the Yandex bonds, convertible notes that can be turned into equity, are entitled to seek redemption at face value after Yandex’s US shares were suspended for more than five days.

That made Yandex the first Russian company with debt issued abroad to trigger a so-called delisting event allowing bondholders to request repayment.

E-commerce company Ozon Holdings and social network operator VK have similar notes. Ozon is currently drafting a proposal for its note holders.

“We are taking all the appropriate steps to address the situation,” a spokeswoman for Yandex wrote in an email.

JP Morgan acted as book-runner in the issuance of Yandex’s convertible bond in February 2020.

The debt was issued from a subsidiary incorporated in the Netherlands. Latham & Watkins participated in a public offering and private placement by Yandex in June 2020, advising the sole underwriter and the sole placement agent in the deal.

A group of Yandex creditors holding more than 70 per cent of the bonds are working with investment bank Houlihan Lokey and law firm Weil Gotshal, the company said on Monday.