Societe Generale’s New York division, through which another Evraz Eurobond coupon was to be paid, blocked the payment. This may cause a technical default of the company, which states that it has sufficient liquidity. Evraz believes that the payment problems arose due to British sanctions against the company’s shareholder Roman Abramovich. The metallurgical holding itself asked for explanations from British regulators about its sanctioned status.
The metallurgical holding Evraz is threatened with default due to the blocking of the payment of coupons for $ 18.9 million on Eurobonds by an intermediary bank. The company revealed in a statement to the LSE that the blockade occurred when paying a coupon on bonds for $ 704 million maturing in 2023.
“According to the London branch of the Bank of New York Mellon, which is the main paying agent, the amount has not been repaid to date and remains blocked for compliance in the correspondent bank Societe Generale New York,” the company said. In this regard, Evraz warned of a potential default.
Evraz believes that the reason for the block was the inclusion of the company’s shareholder Roman Abramovich in the sanctions list of Great Britain.
His share in the company is 28.64%. The metallurgical company reminds that Mr. Abramovich does not have effective control, and the holding itself, in his opinion, is not under sanctions. Evraz has asked British regulators to confirm this, but has not yet received a response.
Evraz is not the first company to face payment problems. EuroChem’s coupon payment was blocked last week, Bloomberg reported, citing sources. The former owner of the company, Andrei Melnichenko, is on the EU sanctions list. On March 16, Severstal, whose beneficiary Alexei Mordashov is also under European sanctions, expressed fears that Citibank, acting as its main paying agent and translation agent, could refrain from making payments on Eurobonds. The company made a test payment of 1% of the coupon to see if it would pass. Since then, Severstal has not said whether it was able to pay the coupon.
Evraz says it has enough liquidity to make payments and intends to make every effort to resolve the coupon as soon as possible.
The company’s EBITDA doubled to $ 5 billion in 2021. The prospectus for Eurobonds that blocked payments said that if the bonds were not met, the bonds would be repaid immediately. Evraz also has another $ 700 million Eurobond issue maturing in 2024.
Technically, the company has five more working days to “deliver” the money to bondholders to avoid a technical default, after which there will be another 30 days to pay in the default mode, says Artem Privalov, a senior analyst at Aton bonds. “The company has already asked the relevant authorities for clarification. In case of refusal of this method of payment, the company will look for other ways, but at the moment it is difficult to say how things will develop if SocGen does not miss the payment, “said the expert.