Vekselberg and Chubais save solar energy from US sanctions

Beluna Investments Ltd, a member of Renova Group of companies Viktor Vekselberg, on August 15, reduced its stake in the power company Hevel from 51 to 46%.
The largest participant in the company with a 49% stake was Rusnano. 5% of the shares of "Hevel" was purchased by the company "Ream Management", owned by Mikhail Sivoldayev. Prior to April 18, he was deputy chairman of the board of Renova and remains a member of the board of directors of Metcombank, of which Vekselberg is the final beneficiary (9.9% of the bank's shares belong to Renova), the bank said.

What is "Hevel"?

"Renova" and "Rosnano" created "Hevel" in 2009 for the development of solar energy. The group includes a plant for the production of solar modules in Novocheboksarsk, a development unit and the Scientific and Technical Center of thin-film technologies in power engineering. According to the company, she manages projects for 907.5 MW, she planned to build hybrid solar-diesel power stations in the Far East with a total capacity of 40 MW. The company does not disclose financial indicators, for this year it forecasted revenue of 7.5 billion rubles.

ACRA analyst Maxim Khudalov estimates the company at 8-10 billion rubles, based on this estimate, 5% could do "Ream management" in 400-500 million rubles.
What does the sanctions mean?

Ream Management has a direct relationship to the structures of the Renova Group and in fact it has retained control over the energy company, said Ilya Zharskiy, managing partner of the Veta Expert Group. He believes that in this way the parties try to minimize the risks of including "Hevel" in the sanctions lists.

In April, "Renova" and Vekselberg came under the sanctions of the US Treasury: the company's counterparties risk becoming the object of secondary sanctions. Under similar sanctions were Oleg Deripaska and his holding company En +. "The main condition for excluding En + from the list by the US Treasury was Deripaska's departure from the direct management of the company and the reduction of its share [in it] is below 50%. Obviously, these recommendations could become an instruction for action on the part of the shareholders of "Hevel", - says the partner of the company "NAFKO-consultants" Irina Mostovaya.

Thus, shareholders are trying to protect "Hevel" from falling into the sanctions lists, the company employee confirmed to "Vedomosti". According to him, the company modernizes the plant in Novocheboksarsk and negotiates with foreign suppliers about equipment supplies: "For the production line, some components that are not produced in Russia are needed. The change of ownership will reduce risks and will allow us to continue to calmly develop the project. "
Will it work or not?

However, the sale of the "Renova" part of the shares does not guarantee "Hevel" protection against sanctions, Zharsky believes, including because of the connection between the founder of Ream Management and the structures of Vekselberg's group. And although the de jure minority shareholder is independent, the existence of these ties can be taken into account by the US Treasury. The Treasury may consider the reduction in the share of Renova as formal, says Mostovaya, which does not bear any real changes in the governance processes of the Hevel.

In April, Renova reduced its share from 63.42 to 48.83% in Swiss Sulzer (produces industrial machinery and equipment) - the package was purchased by the company itself. Its general director Greg Pu-Guillaom told the FT that this was done at the request of the US Treasury and allowed to avoid sanctions against the company.

The company's entry into sanctions lists may become an obstacle to entering international markets, Zharskiy notes. Hevel is negotiating the export of components for solar power plants, Anatoly Chubais, Chairman of the Rusnano Management Committee, told Vedomosti earlier this year.

"Hevel", according to his employee, has already begun export deliveries. In particular, this year it supplied solar panels for 200 kW of an oil company from Thailand. According to the interlocutor of "Vedomosti", "Hevel" is negotiating with potential buyers in Europe.

"Rosnano" and "Renova" could not comment on the changes in the structure of the owners of "Hevel". The company declined to comment.

Energy is running away from sanctions
Victor Vekselberg and Oleg Deripaska save their assets
Kommersant, August 17, 2013

"Renova" Viktor Vekselberg and En + Oleg Deripaska, who fell under US sanctions, began work to reduce the risks for their energy assets. Renova reduced its stake in investing in solar energy to OOO Hevel by 46%, and En + intends to transfer En + Holding from Cyprus jurisdiction to one of the Russian special administrative regions (SAR). Lawyers believe that these measures will reduce the risk of sanctions against certain companies, but when translating assets into the Russian Federation, defects in the new law on the RAA may be revealed.

Beluna Investments Ltd, controlled by Renova, Viktor Vekselberg, has reduced its stake in OOO Hevel (a joint venture with Rusnano) from 51% to 46%, the largest investor in solar energy in Russia. As follows from the data of SPARK-Interfax, 49% of the shares remained with Rosnano, and Beluna acquired 5% from OOO Ream Management, owned by Mikhail Sivoldaev. He is on the board of directors of Metkombank, close to Renova, and previously headed the Renova Management company.

A representative of Renova was not available for comment, Rosnano and Hevel declined to comment. A Kommersant source familiar with the situation says that Renova did not offer its Rusnano package and, according to him, Viktor Vekselberg does not plan to further reduce its stake in the joint venture or exit the business. "Rosnano" initially purchased a stake in "Hevel" as an investment for further sale, but so far the buyer, according to "Kommersant", no.

Viktor Vekselberg, Renova, as well as Oleg Deripaska with his main assets, including RusAl and En + Group, came under US sanctions on April 6. After being included in the blacklist (SDN list), Mr. Vekselberg reduced participation in other assets. In Swiss Oerlikon, affiliated with Mr. Vekselberg structures belonged to 43%, now 19.9%, in the steelmaking Schmolz + Bichenbach the share of the businessman fell from 42% to 12.6%, the share of Renova decreased and in the Swiss Sulzer - from 63.42% up to 48.83%.

"Hevel" did not directly fall under the sanctions, but the relationship with Renova could seriously complicate the work in foreign markets (the company plans to export products) and interfere with the work with foreign banks. Julia Andreeva, head of S & K Vertical's lawyers' projects, believes that a decrease in the share of Renova will help to avoid risks, as the condition of sanctions is the presence of direct or indirect ownership of 50% or more in the company's capital, the transfer of part of the package allows the company "to withdraw itself from under this formal criterion. "

To reduce the share of the main beneficiary under the sanction, Oleg Deripaska's structures are also trying to resort. The "Barker Plan" presented to the US authorities (Gregory Barker, Chairman of the Board of Directors of En + Group Plc, uniting the industrial assets of a businessman) assumes, in particular, the transfer of some of Mr. Deripaska's packages to third parties. While the plan is not approved by Washington.

However, on August 18, En + Group announced another option, which can be considered as an insurance against sanctions risks. The company reregistered Cyprus En + Holding Ltd, which includes energy assets of the group, into one of the special administrative regions set up in the Russian Federation - the Russian island in Primorye and the October Island in the Kaliningrad region. These zones are considered as "internal offshores", in the RAA it will be possible to create or transfer head structures from other jurisdictions with the maximum possible preservation of their advantages, residents will be entitled to pay taxes only from business in Russia and will not be subject to currency control. Only the management company, supervisory bodies and courts will be able to access information about the beneficiaries of the SAR residents. The Board of Directors of En + Group also instructed the management to conduct an analysis of the possible redoxation of the group itself. Earlier it was reported that it could be a possible re-registration in the UAR and the very "Rusal".

Partner of the legal group "Yakovlev & Partners" Veronica Salnikova believes that the trend for redoxification in Russia will continue and other companies registered in Cyprus. "According to our European partners, this is due to the fact that banks are closed in Cyprus, the sanctions regime is still in effect, by the end of the year, accounts of many companies will be frozen." But the lawyer calls the Law on the RAA "completely new for Russian jurisdiction" and notes that there may be "shortcomings" in it.