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East-West Digital News: Two months after its $1.2 billion IPO, Ozon prepares to issue $750 million worth of convertible bonds

Russian e-commerce major Ozon is to offer bonds worth $750 million (aggregate principal amount). These bonds will be issued “on or around Feb. 24, 2021,” with further listing on “an internationally recognized, regularly operating stock exchange.” 

Russian e-commerce major Ozon is to offer bonds worth $750 million (aggregate principal amount). These bonds will be issued “on or around Feb. 24, 2021,” with further listing on “an internationally recognized, regularly operating stock exchange.” 

The company provided the following details on the offer:

  • These are senior unsecured convertible bonds, which will be convertible into American Depositary Shares, each ADS representing one ordinary share of the company. 

  • The initial conversion price of the bonds has been set at $86.6480, representing a 42.5% premium above the reference ADS price of $60.8056, being the volume weighted average price of one ADS on the NASDAQ Global Select Market between opening and closing of trading on Feb. 17, 2021. The conversion rights will be satisfied, at Ozon’s election, with cash, ADSs, or any combination of them.

  • The bonds will be issued at 100% of their principal amount in minimum denominations of $200,000. Each bond will be redeemed at par on Feb. 24, 2026 – unless previously purchased and cancelled, redeemed or converted. 

  • The bonds will carry a coupon of 1.875% per annum. The initial conversion price will be set at a conversion premium of 42.5% above the volume weighted average price of one ADS on the NASDAQ Global Select Market between opening and closing of trading on Feb. 17, 2021.

Added-value services and new verticals


Just two months after it raised $1.2 billion through its oversubscribed NASDAQ IPO – more than twice as much as initially considered – it was not fully expected that Ozon needs to secure another $750 million. 

A source close to the company explained to East-West Digital News that the move is intended to “retain a certain strategic flexibility,” especially as Ozon aims to focus on further fintech products development and IT. While Ozon sees a great potential in their e-commerce core business, the company is also willing to continue developing added-value services and new verticals. 

This orientation is reflected in statements made by Ozon CEO Alexander Shulgin as the company released its operating results earlier this week: “2020 has been an unprecedented year and a transformational one for our company. We see new catalysts for [further] growth not just in our core business, but also in the synergies created by other complementary services we are adding for the benefit of our sellers and buyers and in new verticals such as fintech.”

Impressive results


Founded back in 1998 as an analog of Amazon – at that time, an online seller of books and CDs – Ozon progressively enlarged its assortment. Today Ozon is the number one multicategory e-commerce player in Russia, and among the top three Russian online retailers. It competes with Wilberries, Citilink and alike for e-commerce leadership.

Ozon has just published impressive operational results for 2020 — a year that saw the sales of many Russian e-commerce sites boosted by the pandemic. 

  • The company’s gross merchandise value (GMV) — including services — increased by over 140% year-on-year to more than 195 billion rubles (some $2.7 billion at the average exchange rate of the year);
  • The number of orders increased to 73.9 million, up from 31.8 million in 2019 (+132%);
  • The share of Ozon Marketplace in the company’s GMV reached 48%, compared to 17% in 2019.

Operating cash flow reached breakeven for the full-year 2020. The company attributes its “strong positive” operating cash flow in Q4 2020 to “significant growth of sales volumes and favorable working capital dynamics.” 

“Ozon’s business model with low receivables and significant payables allows the company to utilize its negative working capital as an important element of the liquidity management,” the company states. 

Original article: https://www.ewdn.com/2021/02/19/two-months-after-its-1-2-billion-ipo-ozon-prepares-to-issue-750-million-worth-convertible-bonds/