The leading search engine in Russia, Yandex, could face its downfall as financial ramifications continue from the attack on Ukraine.
Yandex, one of Russia’s largest internet companies and an important search engine for the country with a 60% market share on searches online, announced Thursday that it might be unable to pay off its debt due in part to severe US financial sector sanctions.
The Dutch-based company is an international business with shares listed on both Nasdaq and Russian stock exchanges. However, trading has been halted this week as the value of their assets dropped due to ongoing conflicts in Ukraine.
Over the weekend, a series of unprecedented economic penalties by the United States, European Union, and more major Western countries mounted on the adversity.
Yandex is not subject to US sanctions, but investors who hold $1.25 billion worth of its convertible notes may be entitled to compensation if trading on Nasdaq becomes hindered for more than five days. They can demand repayment with interest added to the price tag.
On Friday, Russia announced that the stock market would be closed until Tuesday.
In a statement, the company said, “The Yandex group as a whole does not currently have sufficient resources to redeem the Notes in full.”
Russia’s largest lender, Sberbank, has been blocked from sending money to its subsidiary in Vienna after a run on deposits leading to the temporary closure of the bank.
“In the event that we were prevented from distributing additional funds from our Russian subsidiaries to our Dutch parent company, Yandex would not have sufficient resources to redeem a majority of the Notes,” said the company. As a result, it poses a massive impact on its capacity to compensate for its financial responsibilities.
“We are currently conducting contingency planning to determine what steps we would take in this regard and what other sources of financing would be available to us in the event that this redemption right is triggered,” added Yandex.
Yandex, which possessed around $17.4 billion market value earlier in February, revealed reports of its revenues at 356 billion rubles in valuation in 2021, currently equal to a bit over $3 billion following the drop in the Russian currency.