Petropavlovsk mulls selling assets amid payment problems, proposal to ban sanctions compliance in Russia

MOSCOW. April 14 (Interfax) - Petropavlovsk , which is currently having problems servicing debt and selling gold, has appointed consulting firm AlixPartners UK LLP to help assess its options in this situation, the gold miner said in a press release.

"These options include the sale of the Company's entire interests in its operating subsidiaries as soon as practically possible," Petropavlovsk said.

The inclusion of Gazprombank (GPB) in the UK sanctions list and the designation of GPB for an asset freeze have made it difficult for Petropavlovsk to service its debt to this Russian lender. The company has already missed two payments, including an interest payment of $560,000 on a $200 million loan and the equivalent of $9.5 million on credit lines extended to the company's subsidiaries in Russia totalling $86.7 million, Petropavlovsk said.

Under the terms of these debts, Petropavlovsk is supposed to sell 100% of its gold production to GPB. The company is exploring options for the sale of its gold, including to other potential buyers, subject to GPB granting waivers, Petropavlovsk said.

Petropavlovsk is also due to pay about $12.4 million on 2022 Eurobonds in May, and redeem them in November. There are currently $304 million worth of these bonds outstanding. In the present circumstances, it will be very challenging to refinance the bonds, Petropavlovsk said.

The situation is further exacerbated by proposed Russian legislation to make it a criminal offence for persons or entities in Russia to refuse to deal with counterparties on the grounds of sanctions. If such legislation is enacted, the company's board may not be able to ensure that its subsidiaries will comply with the sanctions in Russia, Petropavlovsk said.