Gazprombank disclosed the essence of the lawsuit against Mechel

The positions of Gazprombank and Mechel became known in the course of a litigation for 12 billion rubles, initiated by the bank against the coal company. Gazprombank believes that the loan issued to Mechel in 2010 through the French BNP Paribas was syndicated and therefore it is subject to the anti-sanction decree of the President of the Russian Federation of July 5, 2022. Under this decree, resident debtors must pay resident creditors, bypassing the foreign paying agent. Mechel does not recognize the claims of Gazprombank and believes that it has relations only with the French bank.

The lawsuit of Gazprombank against Mechel for 11.9 billion rubles. is based on a decree of the President of the Russian Federation, which allows Russian creditor banks to demand repayment of debt on loans directly from the debtor, bypassing a foreign financial agent, RIA Novosti reports. The positions of the parties were disclosed on June 5 during a preliminary meeting in the Moscow Arbitration Court, about the claim itself “Kommersant” wrote on April 5.

The loan agreement, which became the reason for the lawsuit, was concluded in 2010 between Mechel and the French bank BNP Paribas, the funds went to the construction of a universal rail and beam mill at the Chelyabinsk Metallurgical Plant (CHMK). According to the plaintiff, Gazprombank provided financing to a French bank, which, in turn, financed ChMK. In total, from 2010 to 2013, 30 tranches were issued in the amount of $182 million. According to the plaintiff, Mechel was supposed to return the loan to Gazprombank through BNP Paribas from 2013 to 2019, but did not.

At the moment, the main debt on the loan is about $155 million, and the total debt exceeds $244 million, the plaintiff said.

At the same time, Gazprombank refers to the Decree of the President of the Russian Federation No. 430 of July 5, 2022. According to this decree, Russian companies that are debtors under syndicated loan agreements are obliged to fulfill their obligations under these agreements to resident creditors directly, bypassing a foreign (unfriendly) paying agent.

The representative of “Mechel” during the court session did not recognize the claim. He stated that the loan was not syndicated, and the company has legal relations only with BNP Paribas, and it is not clear to them why the rights of the creditor were transferred to Gazprombank. Mechel petitioned to involve BNP Paribas as a third party, but on June 5 the court rejected this petition. The main hearings will begin on July 17.

In the 20-F report for 2020, Mechel indicated that the presence of delinquency on syndicated loans, including those to BNP Paribas, makes it possible for creditors to demand a lump sum payment of the debt or to levy on collateral. “If ECA lenders resort to forced collection of debt, this could lead to a cross-default on our other obligations and early collection of almost all of our debt,” the company noted at the time.

Gazprombank is Mechel’s largest creditor. In 2020, the company and state creditor banks agreed on the terms of a ten-year restructuring: the total amount of debt after the restructuring amounted to about 335 billion rubles, the debt repayment period was extended until March 2027 with the possibility of prolongation for another three years if the payment schedule is observed.

Mechel did not publish financial statements for 2022. According to BCS Mir Investments, the company’s net debt in 2022 should have fallen by 26%, to $2.6 billion. The company’s EBITDA increased by 5% last year, to $1.8 billion.

Alexey Yadykin, partner and head of dispute resolution at Stonebridge Legal, says that one similar case is currently known in legal practice. Alfa-Bank asked the court to recognize it as a creditor of PJSC Acron, the size of the share in the tranche is $60 million. The court of first instance dismissed the claim, and in April 2023 this position was confirmed by the court of appeal. “In order for a loan to be syndicated, it is enough for it to be issued by two or more banks. The remaining issues are related to the distribution of rights and obligations in this regard,” says the lawyer.

Evgeny Zainullin