Attack from “Region”: demand from Ziyavudin Magomedov 3,3 billion rubles

The court ruled to recover 3.3 billion rubles of debt from Fesco in favor of the investment company Region. The investment company has been linked to Rosneft

The Far Eastern Shipping Company (Fesco head structure) is to pay 3.3 billion rubles to Algorithminvest, the Arbitration Court of Moscow decided on July 2. In this case 3.15 billion rubles is the bond DVMP, the rest – the unpaid coupon income.

In February, Fesco could not pay 6.3 billion rubles on ruble-denominated bonds. Alexander Isurin, the President of the Far Eastern Shipping Company, promised to pay the creditors by the middle of the year. But at the end of June he admitted that these plans are unrealistic and said that it would take another 1.5-2 months.

The claims of Algorithminvest to VMF are not limited with the suit of 3,3 billion rubles. According to SPARK, in court there are three more claims to the structure of Fesco for more than 1 billion rubles.

“Algorithminvest” is part of the investment group “Region”, follows from the data of the Central Bank. “Region” is the largest holder of ruble bonds DVMP, told Forbes two sources close to Fesco. In Fesco refused to disclose the list of bondholders, the “Region” at the time of publication did not respond to Forbes query.

Forbes’ interlocutors connect the investment company with Rosneft’s management and say that Region has repeatedly represented the interests of the state company. One of them says that the Region has about 5 billion rubles in bonds DVMP. The same amount was mentioned by the sources of Vedomosti. According to the newspaper, in 2016 the bonds were transferred to Region by Vneshprombank before its license was revoked. Thus, the bank allegedly reimbursed Rosneft for the funds that the state company had kept in the accounts of Vneshprombank.

Vneshprombank bought the bonds of Far Eastern Shipping Company in exchange for the fact that the Novorossiysk Commercial Sea Port (NCSP) held a deposit in the bank, Vedomosti wrote. The co-owner of both ports is Summa Group. Mikhail Leontyev, a spokesman for Rosneft, assured that the state company no longer cooperates with Region and is not interested in Summa’s port assets. Its owner Ziyavudin Magomedov is now under arrest.

Where do the problems come from

Magomedov together with Mark Garber’s GHP Group bought about 70% of Fesco in 2012. The expenses were estimated at $1.4 billion, the main seller was the former Minister of Fuel and Energy Sergey Generalov.

Initially it was planned to buy from Generalov only the railway operator Transgarant, says the participant of those transactions. But Ziyavudin, who at that time dreamed of a trans-Russian logistics holding company, insisted on buying the entire Fesco. The purchase gave Summa a presence in railway transportation and access to the Far East. But the deal put a heavy burden on Fesco itself.

Fesco was bought “at a fairly high price and with a lot of debt financing,” admitted VTB First Deputy Chairman Yury Solovyov. As a result, “the company ended up in a rather difficult financial situation, mainly because of the amount of dollar debt it was burdened with,” the investment banker said. In the fall of 2017, VTB allocated $680 million to Fesco to pay debts to Eurobond holders. At the same time, the group agreed on a deferral until February 2018 on ruble bonds. But it was unable to fulfill its obligations.

One of the Fesco shareholders blames Ziyavudin for the problems of the holding. According to him, Ziyavudin closed all the management of the group upon himself and resisted selling of the assets to pay debts up to the last moment. There were plans to get rid of some of the Fesco assets even at the stage of the deal with Generalov, says its participant. Due to the sale of Fesco’s blocking stake in Transcontainer the greater part of the debt could have been paid off at once, the source of Forbes laments. But Ziyavudin saw prospects in the container business and, on the contrary, entered into a struggle with the then head of Russian Railways Vladimir Yakunin for control of Transcontainer.