Russia’s largest search engine, Yandex, issued a warning on March 3, 2022 that there were two possible scenarios that could threaten continued operations. Yandex has stated that it could work for several months if either of these scenarios are avoided.
Yandex indicated that its existing data center and technical capacity will allow it to continue operating for at least a year and up to a year and a half.
But that statement was conditioned on no supply disruptions, which Yandex said could have a negative impact on operations.
“In the event of a prolonged suspension of the supply of hardware, software or other technology used in our business or offerings, if we are unable to secure alternative sources, our operations may be adversely affected over time.”
Yandex search engine
Yandex is the most popular search engine in Russia, with user visits reported to be more than 60%.
Yandex is also ranked by some measurements as the eighth most popular site in the world, ahead of TikTok, Netflix, Reddit and Amazon, to give a sense of Yandex’s size and importance.
The impact of economic sanctions on Yandex?
Yandex’s statement indicated that none of the economic sanctions target Yandex or any of its subsidiaries, management, directors, or major shareholders. This means that at the moment there is no direct impact of sanctions on Yandex.
However, Yandex warned that a continued downturn in the economy could have a negative impact on performance.
“Any prolonged economic downturn in Russia as a result of sanctions, ruble depreciation or negative consumer sentiment could have a material negative impact on our results.”
Threatening to seize control
The announcement indicated that it was aware of rumors that private companies could be taken over by the Russian government. Yandex said that since most of its operations and assets are located within Russia, such a move could have a negative impact on its value.
“…any such action will have a material negative impact on the value of the Yandex group as a whole.”
Debt threatens the future of Yandex
Yandex has stated that it has cash reserves in euros equivalent to $615 million, of which $370 million is located outside Russia.
Yandex has stated that under the rules governing its convertible notes due in 2025, principal amount currently at $1.25 billion, Yandex is obligated to notify holders of those notes of their right to redeem those notes should NASDAQ suspend trading in their Class A shares for more than five years. trading days
The statement revealed that Yandex does not have the resources to repay this debt. He further stated that even if he was able to meet the repayment of a physical portion of those bonds, he would still need to secure financing in order to continue in business.
Yandex has stated that it is looking for ways to stay afloat:
“We are currently conducting contingency planning to determine what steps we will take in this regard and what other sources of funding will be available to us, should this right of redemption become operational.”
Yandex warning
Yandex said it was currently operating normally but warned that it could not provide guarantees in the event of a prolonged economic downturn.
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Read the statement from Yandex
Yandex provides an update on the impact of current developments
