Major shoe retailer OR Group, which owns the Westfalika chain, has defaulted on its bonds.
In January, he was unable to pay off five-year bonds, paying only interest on the issue, and now he has again failed to meet obligations of more than 500 million rubles to Promsvyazbank, turning a technical default into a real one. The retailer clarified that he was actively negotiating with the bank, but failed to agree with him
The owner of the chain of shoe stores Westfalika, OR Group (formerly Obuv Rossii), announced the actual default on exchange-traded bonds of the BO-07 series, reported on the company’s website. The bond issuer OOO OR, one of the group’s subsidiaries, failed to fulfill its obligations to bondholders in the amount of 592 million rubles during the technical default period, which expired on February 3.
Earlier, January 20, retailer announced a technical default on exchange-traded bonds of series BO-07. The main holder of the bonds (99%) was Promsvyazbank – this issue is a loan structured in the bond, explained OR Group. “The company considered prolongation as a priority option for resolving the debt situation. During the 10 days allotted for the fulfillment of obligations after the technical default, the group was actively negotiating with the PSB, but an agreement with the creditor was never reached, ”the message says.
Press service of Promsvyazbank earlier informedthat during the negotiations in December 2021, an agreement was reached, according to which the OR Group will redeem all bonds of the BO-07 issue by January 20, and upon fulfillment of this agreement, the bank was ready to consider prolonging the loans. However, the company did not honor the agreement. “In this regard, the bank is forced to proceed with standard debt collection measures,” the lender said.
The retailer named operating activities as a source of money for servicing debt, but noted the impact of the pandemic on the market, which is especially noticeable in the non-food offline retail segment. About 80% of Westfalika’s revenue comes from offline sales, and as a result, revenue for the year decreased by 21%, he explained. “This factor also affected the company’s ability to accumulate the necessary liquidity to fulfill its obligations to issue BO-07 in full,” the report says.
As a result, OR Group faced a problem in servicing liabilities due to high leverage and the cost of borrowing. The company clarified that it is preparing a plan of anti-crisis measures and is exploring options for debt restructuring. The restructuring will provide resources for operating activities, including for changing the business model, OR Group calculates.
OR Group has already begun negotiations with major creditors, including Promsvyazbank, to extend the debt for a longer period, the retailer concluded. The company is also exploring the possibility of attracting investors to the Arifmetika microcredit company.
OR Group placed 500 bonds in the amount of 1 billion rubles on January 26, 2017 on the Moscow Exchange by open subscription. Their nominal value is 2 million rubles each. In 2018-2021, the company partially made payments by buying back 204 bonds from the market in the amount of 408 million rubles.
Shares of OR Group fell by 14.03% over the day – to 8.58 rubles, should from the data of the Moscow Exchange.