QIWI plc, a Russian and international group of companies providing payment and financial services, assessed the consequences of revoking the banking license of QIWI Bank JSC for QIWI's business and announced plans for share repurchase. This is reported in a QIWI press release.
On January 19, 2024, QIWI entered into an agreement to sell Russian assets consolidated in a subsidiary of QIWI JSC, including QIWI Bank, as part of a strategy to develop and expand its international business.
After the transaction closed on January 29, 2024, all shares of QIWI JSC were transferred to Fusion Factor Fintech Limited, a Hong Kong company owned by Andrey Protopopov, former director and CEO of QIWI plc.
The value of the transaction amounted to 23.75 billion rubles, which were supposed to be paid over four years. At the same time, 100% of the shares of Fusion Factor Fintech Limited were pledged in favor of QIWI plc as security for payment of the transaction.
The Board of Directors of QIWI plc has scheduled an extraordinary general meeting of shareholders for March 11, 2024 to approve a tender offer to buy back up to 10% of the issued and outstanding shares of QIWI plc, subject to their implementation.
On February 21, 2024, the Central Bank of the Russian Federation revoked the banking license from QIWI Bank in connection with violations of federal banking legislation and regulations of the Central Bank of the Russian Federation and appointed the State Corporation Deposit Insurance Agency as the interim manager of QIWI Bank. As a result, QIWI Bank was forced to cease operations.
Since QIWI Bank had no signs of bankruptcy, the remaining capital in the amount of RUB 25.0 billion should be transferred to QIWI JSC. However, at the moment, there is no certainty about the further development of events and the availability of any funds of QIWI JSC after liquidation.
QIWI Bank acted as an operator for processing domestic payments in Russia, as well as a supplier and partner for various cross-border transactions, including certain products and services of our international business.
The revocation of the QIWI Bank banking license has a significant negative impact on the valuation of QIWI JSC. However, the agreement between QIWI plc and the Buyer does not provide for a change in the value of the transaction when the valuation of the assets being sold changes. In addition, the purchase and sale agreement does not give any of the parties the right to terminate the transaction and refuse to fulfill it.
The Buyer's refusal to pay will entail the right of QIWI plc, at its sole discretion, to sell or dispose of the shares of the Buyer and QIWI JSC.
QIWI plc also has the right to use any funds collected or received in accordance with the pledge as collateral for obligations.
QIWI plc does not intend to return retired Russian assets in case of non-payment. Instead, QIWI plc plans to initiate a search for a third party to acquire receivables along with the right to claim collateral and/or to exercise other rights and remedies available to the company under the collateral agreement.
In the event of non-payment, the process of selling pledged shares may involve various scenarios, including negotiations, litigation or alternative arrangements, which may lead to a prolonged period of uncertainty regarding the possibility of collecting receivables related to the transaction.
As QIWI plc plans to use the proceeds from the transaction to finance the buyback, any potential default on payments by the Buyer will have an immediate negative impact on the company's ability to finance the buyback. In case of non-payment, the Company will have to reduce the volume of repurchase or postpone it until the situation is resolved with the possibility of collecting receivables from the transaction.
Qiwi plc is a Russian and international group of companies providing payment and financial services in Russia and other countries. The Qiwi group of companies includes the Qiwi payment system, Qiwi Bank, the Contact money transfer system, Factoring Plus, Flocktory, QPlatform and the RealWeb online advertising agency. QIWI's American depositary shares are listed on NASDAQ and the Moscow Stock Exchange.
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