Petropavlovsk agrees sales of assets worth over $600 mln with UMMC

MOSCOW. Aug 4 (Interfax) - Petropavlovsk has reached agreement with Urals Mining and Metallurgical Company (UMMC) on the sale of its Russian subsidiaries and most infrastructure located in other jurisdictions, the issuer of the gold miner's Eurobonds said in a statement.

The deal will be worth more than $600 million if it goes ahead, the issuer said.

The sale is conditional on a number of matters and has a longstop completion date of September 30, 2022. It remains unclear what return, if any, may be secured for shareholders and bondholders of Petropavlovsk.

UMMC is now Petropavlovsk's biggest creditor. Until recently Petropavlovsk's largest creditor and gold buyer was Gazprombank . The imposition of UK sanctions on the bank made it difficult for the company to sell its gold and service its debt, and Petropavlovsk began to miss interest payments. In April, Gazprombank demanded the early repayment of $201 million with interest on a loan to the parent company and $87.1 million on credit lines to subsidiaries. Soon after this, the bank transferred the claim rights against the parent company to UMMC Invest and those against the subsidiaries to a firm called Nordik, but this did not free Petropavlovsk from having to pay off the debt early.

Petropavlovsk also still has $304 million of its $500 million 2022 notes and $33 million of its $125 million 2024 convertible bonds outstanding.

The gold miner's assets were worth $1.619 billion at end-June, and liabilities were $1.703 billion. Net debt was $84 million.

Petropavlovsk, which mines gold deposits in Amur Region, is one of Russia's top five gold producers.