Russian banks may exchange Segezha's debt for additional share issue worth up to 60 bln rubles, pending Central Bank decisions - sources
MOSCOW. March 19 (Interfax) - A group of major Russian banks may assist the debt-laden forestry holding Segezha Group in resolving its financial problems by participating in a planned additional share issue, securing an exit guarantee in the future.
The implementation of this scheme depends on the decision of the Central Bank of Russia, from which banks are awaiting targeted regulatory relaxations to ensure that entering the company's capital does not negatively impact their own capital.
According to Interfax sources familiar with the discussion of the parameters of the additional share issue by the forestry holding, which is controlled by AFK Sistema , more than half of the issue could be purchased by creditor banks, including Sberbank , VTB , Alfa-Bank and Credit Bank of Moscow (MKB) .
The announced maximum volume of the placement is 101 billion rubles, with the company issuing a total of 62.76 billion shares, including pre-emptive rights, at a price of 1.8 rubles per share. According to one source, Sistema is ready to purchase shares worth up to 50 billion rubles. A comparable portion of the additional issue, up to 60 billion rubles, is expected to be bought by creditor banks so that Segezha can use the proceeds to repay part of its debt to them. Essentially, this is a debt-to-equity conversion, albeit through a more complex scheme, one of the sources said.
Segezha's net debt as of the end of Q3 2024 amounted to 143.5 billion rubles, with a net debt to LTM OIBDA ratio of 13x. The current amount of debt exceeds 150 billion rubles, a source said.
The company's unstable financial position complicates the banks' participation in Segezha's additional share issue, given the CBR's strict requirements for provisioning and capital adequacy. The possibility of reducing the risk weight of these factors for the Segezha deal as an exception is currently being discussed by the company, banks and the CBR, sources said.
The terms of the banks' participation in Segezha's additional share issue provide for the sale of the acquired shares after three years if the company's capitalization grows, or a gradual exit from the holding's capital with an agreed return if Segezha's share price does not increase by 2028. Currently, one share on the Moscow Exchange is worth around 1.9 rubles.
The discussed parameters of the additional issue suggest that, following the placement, Sistema's stake in Segezha may temporarily fall below the controlling level - to approximately 47.8% from the current 62.2%.
Interfax has sent inquiries to Sistema, the CBR and the banks potentially participating in the additional share issue.
Currently, Segezha's charter capital consists of 15.69 billion ordinary shares with a nominal value of 0.1 rubles each. Free float accounts for 24.25% of the company's shares, AFK Sistema owns 62.2%, and the combined stake of board members and management is 4%. If the additional share issue is fully placed, Segezha's charter capital could increase five-fold.
The CBR registered Segezha's additional share issue on February 28. As reported in the company's materials, the shares are being placed through a closed subscription in favor of AFK Sistema and four specialized financial entities - Gallium Capital, Iridium Finance, Neon Finance and JSC Interbiz. Segezha shareholders can exercise their pre-emptive right to purchase shares until April 17.
