Gazprombank sued Mechel for 11.9 billion rubles. BNP Paribas loan debt

One of Mechel’s largest creditors, Gazprombank, sued the holding for 11.9 billion rubles, which the company had to repay on a loan issued in 2010 by a Russian bank through BNP Paribas. The case was decided by the interpretation of the anti-sanction presidential decree of 2022, according to which Russian companies must fulfill obligations to resident creditors, bypassing a foreign paying agent. Mechel did not agree with this interpretation. However, analysts believe that the company has enough funds to pay.

The Moscow Arbitration Court upheld lawsuit Gazprombank to the Chelyabinsk Metallurgical Plant, which is part of the Mechel group, recovering $ 244.2 million, reports Interfax. This amount includes $154.8 million of principal debt and $89.4 million of interest. The debt will be collected from the defendants in rubles at the exchange rate of the Central Bank on the date of payment. In the filing cabinet of the court, the claim was valued at 11.9 billion rubles.

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’s position, Gazprombank provided financing to a French bank, which, in turn, financed ChMK. The funds were supposed to be returned before 2019, but the last payment on the principal debt was received in 2014.

plaintiff referred to the anti-sanctions decree of the President of the Russian Federation 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. During the meeting, Mechel objected to the claim, believing that in this case the anti-sanctions decree cannot be applied, since it is used in cases where a foreign entity does not fulfill its obligations to the Russian company due to the imposed sanctions. And in this case, the obligations have not been fulfilled since 2014. In addition, the statute of limitations in the case had expired, the defendant argued.

“If you look at how the relationship between Mechel, ChMK, Gazprombank and BNP Paribas is built, we can assume that the provisions of the decree are applicable,” commented Alexander Terentiev, a forensic expert at Veta Group. “The argument that the last payment was in 2014 year and the statute of limitations has expired, it is rather difficult to assess. I suppose that Gazprombank could appeal to the fact that it had an agreement concluded with BNP Paribas, to which Mechel had previously fulfilled its obligations, and the rule itself, which allows applying a special settlement procedure, appeared a little over a year ago, so the general procedure application of the statute of limitations here may not be applicable”. Mechel told Kommersant that they are waiting for the text of the court decision for further action. The GPB did not respond to Kommersant’s request.

The Moscow Arbitration Court is considering yet another lawsuit filed by the bank against Mechel and its companies to foreclose on pledged property.

The collateral for the disputed loan, follows from the case materials, were mortgage agreements, pledge of shares, equipment and pledge of rights under a supply agreement.

Ordinary shares of Mechel fell at the auction on July 17 by 1.9%, to 186.7 rubles, preferred shares – by 1.5%, to 196.45 rubles. The company has not paid dividends on ordinary shares since 2012, and on preferred shares since 2020, although in the last two years thanks to restructuring the company’s leverage has declined significantly, and the overall financial position has improved significantly on the back of high coal prices. The company currently does not disclose financial statements.

Analysts note that even if Mechel fails to challenge the court decision, the company is able to pay this money. Telegram channel analysts “My investment” note that from a fundamental point of view, the recovery of 11.9 billion rubles from Mechel is nothing more than a simple debt payment. Analysts at the Sinara investment bank believe that Mechel is able to repay the debt at the expense of operating cash flow.

Evgeny Zainullin