Russian Evraz coupon payment blocked for ties with Abramovich

(Bloomberg) — A $18.9 million coupon payment on a bond issued by Evraz PLC was blocked due to the Russian steelmaker's links with sanctioned billionaire Roman Abramovich.

Evraz moved the funds a week ago, but the company's correspondent bank, Société Générale New York, stopped its transfer to payment agent BNY Mellon for compliance reasons, the steel company said in a regulatory filing on Monday.

The embargo “stems from recent uncertainties” after Abramovich was included in the UK sanctions, according to the document. The entrepreneur, who owns 28.64% of the company's capital, “does not have effective control of the company,” he said.

The Evraz coupon is one of the imminently due Russian corporate and government bond payments. Billions of dollars have been called into question after the Russian invasion of Ukraine led to unprecedented international sanctions, including the freezing of foreign assets of billionaires and the foreign exchange reserves of the Russian central bank.

The company says that the fate of its voucher seems to depend on the sanctions imposed on Abramovich by both the UK and the European Union. Such sanctions left its assets frozen, while the future of the Chelsea FC football club he owns is uncertain.

Evraz has made “every effort” to release payment in recent days, including providing the correspondent bank with information on the “substance and economic nature” of the coupon, the statement said.

The company is listed on the London Stock Exchange, although its shares have been suspended since March 10. The second and third largest shareholders, co-founder Alexander Abramov and Alexander Frolov, with 19.3% and 9.65% of the company's shares, respectively, are not included in the sanctions list. Both resigned from Evraz's board of directors following the sanctions imposed on Abramovich on March 11.

'Malfunction' of the SocGen infrastructure

and BNY Mellon declined to comment when contacted by Bloomberg News.

“Apart from the malfunction of the financial infrastructure, there is no reason for a Potential Default Event,” Evraz said in the statement. “The Issuer has sufficient liquidity to make coupon payments.”

The coupon payment was due on March 21, according to the document. If funds are not transferred, a grace period of five business days is triggered, depending on the prospectus of the bonus.

Evraz has sought clarification from the Ministry of Foreign Affairs and the Commonwealth of Nations and the Office for the Enforcement of Financial Sanctions, he added.

Original Note:

Evraz Says Abramovich Ties Leave Bond Coupon Cash In Limbo

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