USK pre-capitalizes Vyborg Shipyard for 790 million rubles

The enterprise will be capitalized at the expense of the United Shipbuilding Corporation by 790 million rubles.
JSC United Shipbuilding Corporation (USC) will pre-capitalize JSC Vyborg Shipbuilding Plant (VSZ, part of USC) in the amount of 790 million rubles, the plant's general director Alexander Solovyov told Kommersant. According to him, this is done "in order to be accurate in order to correct the balance of society." Negative net assets of the company at the end of 2017 amounted to 755.3 million rubles. Last time the authorized capital of the plant was increased by 300 million rubles in February 2017. Then it was due to compensation from the exchange rate difference for the construction of three icebreakers of the project 21900, ordered back in 2012.

FAZ will receive 790 million rubles from USC as part of the increase in the company's charter capital through the placement of additional shares through closed subscription. The funds will be used to eliminate the accumulated negative net assets of the plant, General Director of the VSZ Alexander Solovyov told Kommersant. "Living" money the company will not see. Means, including, will be directed to intracorporate settlements with USC. As of December 31, 2017 negative net assets of the aircraft were 755.3 million rubles. At the end of 2016, this figure reached 1 billion rubles.

The main factor that influenced the emergence of the negative value of the company's net assets is the deficit of current assets, which necessitated the borrowing and, as a consequence, the growth of accounts payable, the 2017 FAO annual report says. In 2018, the plant plans to bring the value of net assets in accordance with the amount of the authorized capital, including, reducing the credit load through highly profitable projects and executing orders made in 2015-2017, which can provide the plant with a net profit of up to 5% of prices of contracts.

Earlier, USC capitalized the shipyard in February 2017 for 300 million rubles. This was due to the devaluation of the ruble and the increase in interest rates for the construction of three diesel-electric icebreakers of Project 21900 for FSUE "Rosmorport", a contract for which the VSZ signed in 2012. The estimated cost of each vessel was 4.06 billion rubles. For the missing funds, the plant attracted loans in banks. Losses in the construction of icebreakers amounted to 850 million rubles.

Revenue FAZ for 2017 increased by 2.1 times, to 11.8 billion rubles, follows from the reporting under RAS. Net profit amounted to 11.9 million rubles against a loss in 2016 in the amount of 1 billion rubles. VSZ concluded a loan agreement with VTB Bank in June 2013 for 1.4 billion rubles, the debt under this agreement at the beginning of 2018 was 617.8 million rubles, said the general director of the agency "Infoline-Analytics" Mikhail Burmistrov. Short-term loans in the amount of 1.9 billion rubles in 2017 were also from VTB. "In fact, the plant is forced to send most of the profits to the servicing of VTB credit lines acquired as a result of liabilities arising from the need to refinance the debts issued by other banks in the period 2010-2012, when the aircraft was still owned by Rossiya bank," says the analyst. IR ALOR Alexei Antonov.

Since 2013, VTB is the key financial partner of the VSZ, while the transactions are secured by the guarantee of USC. Periodically until this year, FAZ received credit lines from the bank with a maturity of one to two years, the amounts were given different - from 400 million to 1 billion rubles or more, says Mr. Antonov.

The main orders that formed the company's revenue in 2017 were three icebreakers - two for Gazprom Neft and one for Atomflot. In 2018, more than half of the company's turnover will be formed by fishing and crab fishing vessels, under which investment quotas are allocated ("keel quotas"). The Northwest Fishery Consortium (SZRK) of Dmitry Ozersky has placed orders for the construction of crabs. Contracts for the construction of six vessels were signed in 2017, agreements for four more vessels were reached earlier this year. However, customers can refuse to build ships because of the transition from the historical principle of issuing quotas to the auction. According to the source of Kommersant in the shipbuilding industry, the adoption of a decision on the rules for the crab catch is shifting towards the end of the year. Potential changes to the rules for the issuance of quotas can also be ordered by the FAZ for a series of trawlers from the Arkhangelsk Trawl Fleet (ATF, part of the SZRK). On the other hand, Kommersant's source in the fishing industry says, other companies can order ships.

VSZ most successfully among all USC shipyards in 2016-2017 formed a portfolio of civil orders, Mr. Burmistrov notes. Without taking into account the possible refusal to build a series of ships of crab and a reduction in the number of fishing trawlers due to the planned transition from a historical to an auction principle of allocating quotas for the crab, the capacity utilization of the plant is ensured until 2023, the expert believes. At the same time, the capacities of the enterprise need to be modernized in order to "narrow" the places and increase the number of vessels under construction from three to five a year. The modernization is planned to start in the spring of 2019, the volume of investments is 2 billion rubles. To implement the project, it will be necessary to attract loans, which is impossible in conditions when the company's net assets are negative (it was previously planned that Vnesheconombank will partner with it). The pre-capitalization of the plant from the USC will allow starting negotiations on attracting a loan for upgrading capacities, but in case of transition to the auction system for allocating quotas for crab catch, the company's loading by orders for 2020-2023 will be lost, and the economic efficiency of modernization will not be achieved, concludes Mr. Burmistrov.