By John Helmer, Moscow

Andrei Melnichenko has extra reason to be concerned about the sunlight — and we aren’t talking financial transparency. The owner of Eurochem, a large Russian producer of fertilizers, says he has evidence that sunlight on his surfaces reveals rash, blotches, separations, lines, starring and sagging. He says he’s paid to see his face reflected on the surfaces, but because the job has been botched, he can’t. The damage he is estimating at $100 million.

That’s not Melnichenko’s person we are talking about, but the surfaces of his boat, a motor yacht named A, after his wife Alexandra, and owned by the two of them through a succession of offshore companies, starting with Niedes Ltd. of British Virgin Islands, A Yacht Charter Co. of Isle of Man, and currently Bermuda Yachts Ltd of Bermuda.
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by John Helmer - Sunday, December 15th, 2013
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By John Helmer, Moscow

Interpipe, the heavily indebted Ukrainian pipemaker owned by Victor Pinchuk (centre), owes at least $120 million to Russian banks, led by state-owned Sberbank controlled by former Minister of Economic Development, German Gref (wall picture, left). But the Russian bankers are not represented in any of the loan restructuring negotiations which are currently under way, following Interpipe’s default on $106 million in debts owed to its international lenders on November 1.

The Russian debt and the Russian influence over Interpipe’s financial survival have been disclosed by Interpipe executives at a briefing for Interpipe’s Eurobond holders on December 9. The Russian loan agreements carry standard protective clauses allowing a call for full repayment when Pinchuk and his holding are in default to other lenders, suppliers, or creditors. If the Russians decide to do this, Interpipe’s executives acknowledge they cannot pay. They have less than $90 million in free cash at present, and admit they cannot borrow extra money.
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by John Helmer - Friday, December 13th, 2013
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By John Helmer, Moscow

The Russian Government has decided that state-owned United Shipbuilding Corporation (USC) may buy control of Novorossiysk Shipyard (NSY) from the Novorossiysk Commercial Seaport Company (NCSP), which is currently in the midst of bitter conflict between state shareholders and Ziyavudin Magomedov (picture, right). The takeover has been promoted by Dmitry Rogozin, deputy prime minister in charge of the military industrial complex, as a solution to the ship repair requirements of the Russian Navy whose operations are growing fast in the Mediterranean, as well as the Black Sea.

The takeover move is also backed by Transneft, the crude oil pipeline company, and Russian Railways, which already control about 41% of NCSP’s shares; and by Rosneft, the state oil exporter, which is bidding to acquire the remaining 20% stake which the state holds in NCSP. A beneficiary of their alliance is Gennady Timchenko; his Gunvor oil trading group controls the new Ust-Luga oil terminal on the Gulf of Finland, to which increasing crude oil volumes have been directed by Transneft, cutting tanker shipments out of Primorsk by more than 20% this year, compared to 2012. Primorsk was merged with Novorossiysk in 2011. Because of the competition from Ust-Luga, Primorsk is now loading tankers at its lowest volume in more than five years.
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by John Helmer - Friday, December 13th, 2013
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By John Helmer, Moscow

For the first time Alrosa, the state-owned diamond miner, has come out in public and said it wants to buy Grib, the only commercially developed Russian diamond mine owned by LUKoil and its chief executive, Vagit Alekperov. Why it should say so now, when earlier announcements by Alrosa have veiled the target and concealed sale and purchase talks with LUKoil a year ago, isn’t clear.

“If the asset proves to be interesting,” said Igor Kulichik, Alrosa’s chief financial officer, “and if we agree on the price then we are prepared to discuss with Lukoil the purchase of this asset.” Kulichik was briefing sector analysts on Alrosa’s third-quarter financial results on December 5. He was explicitly asked about the Grib sale by a VTB analyst. “We know this asset quite well and we follow it. Yes, Lukoil is targeting to commence production and beneficiation early next year and in the next year they are targeting to already sell from there. We discussed with Lukoil a potential sale of that pipe about a year ago. But our geologists find it difficult to assess exactly what raw material is there in that pipe. So we decided not to rush, basically to let Lukoil start production there, see what comes out of that pipe, see how it develops and then to consider the potential purchase of the asset.” Kulichik made his comment on December 5; Alrosa published the transcript five days later.
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by John Helmer - Tuesday, December 10th, 2013
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By John Helmer, Moscow

Russian justice being what is, it is exceptional when the chief executive of a company owned by Oleg Deripaska (right) is arrested and carried off to prison on charges of fraud.

As the days lengthen through which Deripaska’s man must spend behind bars – 16 as of today — interrogated by the Investigative Committee of the General Prosecutor, the likelihood grows that it is Deripaska himself who is the real target. Sources familiar with the matter claim this is the preliminary for an event being planned once the Winter Olympic Games conclude in Sochi on February 23. Not the ski jump, though: the sources claim this time it’s Deripaska for the high jump.
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by John Helmer - Sunday, December 8th, 2013
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By John Helmer, Moscow

Victor Pinchuk, the owner of Interpipe, the Ukrainian steelmaker which defaulted on its debts on November 1, has called his first-ever public business meeting. The date is December 9, and the meeting will be telephonic. Deutsche Bank, which is acting as trustee for Interpipe’s $200 million Eurobond issue, is promising to answer questions about the company’s financial collapse, and provide a copy of the debt repayment agreement Pinchuk has with his banks.

Those attending the meeting will not be able to read Interpipe’s presentation until the start of the conference call. They will then have just 60 minutes to read, ask their questions, and listen to the answers. According to Deutsche Bank, the conference call will “last no more than one hour.”
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by John Helmer - Thursday, December 5th, 2013
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By John Helmer, Moscow

Following a fresh investigation of its business practices in the former Soviet Union, TeliaSonera, the Stockholm-based telecommunications company, reported Friday that it has dismissed four senior executives, including the chief financial officer and the head of its mobile telephone division. A company statement claims that the objective of the investigation was “a risk assessment from a business ethics perspective”. The spokesman of the company, Salomon Bekele, says the targets were geographically limited to its “Eurasia division”, and that TeliaSonera’s business in Uzbekistan and Russia were “excepted”.

According to TeliaSonera’s financial report for the first nine months of the year, issued on October 17, Sweden currently accounts for about 36% of the company’s sales, Eurasia about 22%. But the Eurasia division is the group’s main source of growth, generating SEK5.3 billion ($807.6 million), 11.1% more in sales revenues compared to last year counted in local currencies; in Swedish kronor the growth rate was 3.1%. Earnings (Ebitda) from the Eurasian division jumped 9.5% to SEK8 billion ($1.2 billion). By comparison, the company’s consolidated revenues fell by 1.8%, earnings rose by 1.5%.
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by John Helmer - Tuesday, December 3rd, 2013
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By John Helmer, Moscow

According to Colin Russell, an Australian who was the radioman on board the Greenpeace vessel, Arctic Sunrise, he’s “a good man”. Arrested by Russian coast guards after barricading himself in the radio room on September 19, he was imprisoned in Murmansk and St. Petersburg, until he was granted bail and released last Thursday, November 28. Russell claimed on his release: “I don’t understand the reasons why I’m being detained. It’s two months’ hard time for nothing. I’ve done nothing wrong.”

The initial charges considered against Russell by Russian prosecutors were resisting arrest, disorderly conduct, and piracy. The legal case for the piracy charge has been spelled out, not in the Russian courts, but in the federal US District Court and US Court of Appeals for the 9th Circuit, which covers the northern Pacific coast states and Alaska. If you want to understand why piracy may be charged against unarmed attackers of a vessel at sea, read this US ruling carefully.
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by John Helmer - Sunday, December 1st, 2013
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By John Helmer, Moscow

In the world of mules there are no rules (so Ogden Nash wrote last century). In selling $50 billion worth of nuclear reactors, there are a few.

Sergei Kirienko, the prime minister in charge of the Russian government’s default on its treasury bonds and other financial destruction in 1998, is no donkey. But this week, as the head of the state nuclear power monopoly Rosatom, it’s far from clear what rules Kirienko, and his South African counterparts, had in mind when they initialled their agreement on cooperation this week in Johannesburg.

Russian and South African press reports, as well as officials of both countries, have described the document as an agreement between the two governments for “strategic partnership and cooperation in the field of nuclear energy and industry”, as Vedomosti called it.
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by John Helmer - Thursday, November 28th, 2013
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By John Helmer, Moscow

Interpipe, the Ukrainian pipemaker owned by Victor Pinchuk (left), son-in-law of ex-President Leonid Kuchma (centre, right), has released its first official acknowledgement that it is in default on $106 million of debt owed to its banks. In a statement yesterday on the company website, Interpipe said negotiations are under way with the banks, and that they had been informed in advance of the company’s failure to meet the repayment amount due on November 1. “The creditor banks”, according to Interpipe, “have formed a steering committee of creditors. The parties will have to agree to change the schedule of payments on the main body of the loans, as well as some other changes in the loan agreement conditions. The company plans to continue to pay interest on all borrowings in full. The operating activities of Interpipe run in the normal mode.”

Interpipe’s debts currently exceed $1.3 billion; it has less than $50 million in cash. The banks, which negotiated with Interpipe for an earlier debt restructuring agreement in 2011, include Citi, Barclays, Intesa, ING, and Credit Agricole. The banks are not commenting publicly except for Intesa in Milan; it said this week it is aware of the default and is evaluating the situation with the other lenders.
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by John Helmer - Wednesday, November 27th, 2013
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