23 Mar 2022 21:08

Severstal unable to conduct test Eurobond coupon payment, hoping to resolve situation

MOSCOW. March 23 (Interfax) - Severstal was unable to make a test payment on its 2024 Eurobonds, with the funds frozen by the payment agent. The company expects to resolve the payment situation in the interests of the Eurobond holders.

"Today we announced that we were unable to make the coupon payment to our Eurobond holders on time," Severstal CEO Alexander Shevelev said in a statement circulated by the company.

"Unfortunately, our western financial partner has frozen the payment initiated by the company. We continue consultations with our partners and are doing our best to ensure that the bondholders receive the funds in accordance with the terms of the bond issue," Shevelev said.

He noted that the company hopes for cooperation on the part of the payment agent, which, like the company itself, should act in the interests of bondholders, among whom there are both Russian and foreign residents.

"I hope that this injustice will be resolved soon, and the rights of bondholders will be realized," Shevelev said.

Severstal maintains a stable financial position, confirms its readiness and willingness to fulfill its debt obligations in full, and has the necessary resources to do so, the CEO said.

The company has been "in constant liaison with the principal paying agent and the trustee (Citibank, N.A., London Branch) and are looking to initiate the application for licenses from the relevant competent authorities that may be required for an uninterrupted processing of Severstal's payment instruction," the statement said. The company is recommending that "noteholders contact the trustee and request the trustee to cooperate with the company in its efforts to obtain the licenses from the relevant competent authorities required to enable the processing of payments due under the loan and the notes as well as to liaise with the relevant authorities to pursue a broader solution in order to minimize unintended effect of the sanctions restrictions on the noteholders."

"We will keep the noteholders regularly informed about the progress of our communications with the trustee and the relevant regulatory filings and expect that this unprecedented situation can be resolved to the benefit of noteholders as soon as is practically possible," the company said.

Last week, Severstal, whose majority owner, Alexei Mordashov, has been under EU sanctions since late February, announced that it would make a trial payment on Eurobonds at a 1% coupon rate. If the agent bank (Citibank), approved it, the Eurobond holders would receive the rest, but if the payment is rejected, the company said that it would use "alternative options" for payments.