VTB Bank requires AnAn Group to pay extra for the pledge

Procrediting a repo transaction during the IPO En + Group of Oleg Deripaska, VTB Bank requires the Singaporean company AnAn Group $ 170.4 million. Most likely, the bank will receive only a hole from a bagel: the Singapore company belongs to the Chinese CEFC, which did not override the stake in Rosneft and was bankrupt.
VTB, which issued a loan from Singaporean AnAn Group against a 6.25% deposit of Oleg Deripaska's En + Group and already received this margin call, requires the group to pay another $ 170 million. The lawyers believe that this is the difference between the amount of the loan and the cost of the En + package, which has fallen in price 2.5 times after the introduction of US sanctions against Mr. Deripaska. But AnAn Group is associated with the infamous Chinese CEFC, whose debts are five times larger than assets.

On July 23, VTB demanded $ 170 million from Singaporean AnAn Group as part of repurchase obligations with En + Group shares Oleg Deripaska, Bermuda AnAn International reported on July 30. If the debt is not repaid or settled within 21 days of receipt of claims, the bank may file an action with the Singapore High Court for the bankruptcy of the AnAn Group and use other ways to protect its interests, the report said.

In November 2017, En + held an IPO on the London Stock Exchange at $ 1.5 billion, offering the market 18.8% of the shares in the form of GDR. AnAn acquired 6.25% for $ 500 million and before the placement was named a "key investor" with the right of veto on a wide range of issues. But in fact, the money for the transaction AnAn provided VTB, to which the group immediately laid the entire stake in En + for repo, but could not return the money. On the one hand, the April sanctions of the US Treasury against Oleg Deripaska and his assets, which led to the drop in quotes En + 2.5 times, prevented this. On the other hand, the financial and political problems of the Chinese group CEFC, which in the prospectus of En + was called the "strategic partner" of AnAn and is known primarily because it frustrated the deal to buy Rosneft's 14.2% for $ 9.1 billion.

In late May, the first deputy chairman of VTB Yury Soloviev said that the AnAn package in En + passed to the bank by margin call. In the message, AnAn International says that sanctions have become "unforeseen force majeure". VTB declined to comment, it was not possible to contact AnAn and CEFC.

Head of bankruptcy practice of law firm Infralex Stanislav Petrov notes that the bank has the right to demand that the company pay the remaining debt after deduction of the value of the received En + package, which fell significantly on the exchange. At the same time, the lawyer points out, the Russian courts now do not recognize economic sanctions as force majeure, and "it can be suggested that foreign courts, including the High Court of Singapore, will adhere to the same approach." According to Natalia Kolerova, the head of the projects of the lawyers' bureau of S & K Vertical, there are no special preferences for bankrupt models in Singapore, the country's legislation "largely reproduces the acts and laws of the United States, but the bankruptcy procedures are in Asia in the making, so companies are trying to take them to other jurisdiction, for example in the United States or the United Kingdom, justifying the debtor's relationship with this jurisdiction. " Stanislav Petrov points out that the initiation of the bankruptcy procedure will allow VTB not to miss the moment for presenting its demands and be aware of the progress of the case.

There is no public information about AnAn Group assets, the value of AnAn International assets as of March 31 was $ 357 million against obligations in the amount of $ 265 million. Since the arrest of the head of CEFC E Jianmin in February, the conglomerate's activity has been paralyzed and it is in a state of decay. Property management CEFC took over the state bank of China Development Bank, which heads the creditors' committee, and CEFC assets are now estimated at $ 3.2 billion with claims of $ 14.5 billion.

VTB requires from the former shareholder En + $ 170 million
This money AnAn Group owes to the bank for non-repo transaction
Vedomosti, July 31, 2013

Singapore AnAn Group, controlled by the Chinese company CEFC (previously claimed 14.16% of Rosneft), on July 23 received a demand from the Russian bank VTB to pay off the debt for $ 170.4 million, it follows from the message AnAn International Limited.

The debt was formed due to the failure of the repo transaction, indicated in the message. The Singapore company participated in the IPO of the En + electromechanical company, Oleg Deripaska, last November. For $ 500 million, including those taken in VTB, AnAn bought 6.25% of En + when placing shares on the London Stock Exchange. After that, AnAn laid the stake in VTB for the repo transaction, the bank reported. But on April 6, 2018, the Office of Foreign Assets Control (OFAC) of the US Treasury imposed sanctions against En +, UC Rusal, Oleg Deripaska and his other assets. As a result, the capitalization of En + collapsed at times. At the end of May, AnAn lost the 6.25% stake in the margin call, it was received by VTB, said Yury Soloviev, the first deputy chairman of the VTB board. As a result, VTB's share in En + rose to 9.62%.

$ 170.4 million - the difference between the amount that AnAn was supposed to pay VTB for the repo transaction, and the cost of the En + package, which the bank withdrew to repay the debt, said Vedomosti, an interlocutor close to one of the parties to the deal. Confirm this information "Vedomosti" failed. A representative of VTB declined to comment.

When the An An package was seized in En +, it is not known for certain, Soloviev announced this on May 28. Then 6.25% of the electrometallurgical company cost on the London Stock Exchange $ 192 million (trades are not held since April 9, but the exchange reflects the cost of receipts), and on the Moscow stock exchange - 10.7 billion rubles.

"The Singapore structure of the CEFC bought a package in En + for its own and borrowed funds," - explains the interlocutor of Vedomosti, who is familiar with the terms of the deal. He clarifies that AnAn expected to receive a bridge loan for two years to buy shares in the Deripaska structure, and then refinance the obligations in the China Development Bank. "But after the head structure - CEFC - started having problems with borrowing in China, the [Singapore] company felt the same problems," he says. The described scheme of financing and security is used quite often, said the senior analyst of BCS Sergey Suverov.

The AnAn Group has 21 days to repay the debt, the company reported (AnAn Group is a non-public company, it does not disclose the data, but its "daughter" AnAn International is a public one, and about $ 15 million was on its accounts at the end of the first quarter of 2018). After this period, VTB may apply to the High Court of Singapore. The Board of Directors of AnAn warns that VTB's claims may have a bad effect on the company's activities.

The bank has the right to demand additional security or a partial refund of money regardless of the reason margin call, Ivan Tertychnyy, partner of Tertychny Agabalyan, notes: "After all, the bank can not abide by the Central Bank's standards even because of sanctions and force majeure."

AnAn insists that the sanctions against En + are force majeure circumstances: they led to the depreciation of En + shares. It is unlikely that the court will recognize the sanctions as force majeure, "this would create a dangerous precedent," says BMS Law Firm partner Denis Frolov. AnAn is unlikely to find reasons to not pay, but it will be difficult to recover money, Suverov continues: "If AnAn lacks assets and there are no sureties, VTB may not receive money. There is an opportunity to apply to the shareholders or beneficiaries of AnAn, but such claims will delay the process, "he concludes.