13 Feb 2018 14:29

En+ did not violate sanctions regime by repaying VTB loan with funds raised in IPO - bank

MOSCOW. Feb 13 (Interfax) - The repayment of a VTB loan by Oleg Deripaska's En+ using funds raised in an IPO on the London Stock Exchange (LSE) is not a violation of the sanctions regime, the state-owned bank said in a statement.

"The IPO of EN+ was an absolutely transparent transaction executed in full compliance with the necessary market requirements. It became the largest IPO in the metals & mining sector in the world since 2011. A total of 11 investment banks, seven of them international, including four banks from U.S., two from Switzerland and one from France participated in the preparation and execution of the deal," VTB said.

The bank also said that the majority of shares were bought by foreign investors from various regions including the U.S., Europe, the Middle East and Asia; the IPO prospectus was approved by the FCA, and the listing was approved by the LSE.

"With regards to VTB, the bank became a shareholder in En+ in 2011, long before the introduction of sanctions. VTB group conducts all its operations in full compliance with applicable rules and regulations including restrictive measures imposed by domestic or foreign organizations and governments," VTB said in the statement.

"Allegations that paying out debt owed to VTB with the funds from En+ IPO supposedly breached the sanctions regime are unfounded and absolutely false, since these financial transactions are not restricted by sanctions," VTB said.

En+ held its IPO on the London Stock Exchange in November last year for a total of $1.5 billion. The company raised $1 billion for itself and Deripaska received the other $500 million. The company said that it is planning to allocate nearly all the funds from the deal towards paying off debt to VTB in its IPO prospectus.

The funds may also be used to lower the price at which shares ledged under the forward deal with the bank would be repurchased.

The Telegraph reported last week that the British intelligence service MI6 has raised concerns that the En+ IPO was conducted on the LSE without the intelligence services having been consulted. The newspaper said that MI6 was concerned that one the company's shareholders - VTB - is under EU and U.S. sanctions and that fact that En+ principal owner Deripaska owns Rusal which supplies goods to the Russian defense industry.

The Telegraph reported on Monday that the U.S. National Security Agency (NSA) also has questions regarding the deal.