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By John Helmer in Moscow
The growing number of tape-recorded disclosures from a bed belonging to Italian Prime Minister Silvio Berlusconi has attracted a rising vote of no-confidence in the prime minister from Italian voters, and unusual interest in what happened on the bed in much of western Europe. One Italian opinion poll published at the end of last week reports that Berlusconi has lost 4 percentage points.
A ranking Russian official has telephoned to make absolutely plain that whatever was done on the bed was Italian, and that nothing can be found there from Russia. He was responding to a request to the Russian Prime Minister’s office to clarify reports that Berlusconi had been heard on tape claiming to a lady friend that a bed in his apartment, on which he proposed she and he lie together, had been the gift of Vladimir Putin, now Prime Minister of Russia.
The Russian official identified himself by name. A subsequent check of the official records has verified his name and position in the Press Office of the Prime Minister. The official requested that he not be identified by name, but his remarks, he said, could be quoted as from the Press Office of the Prime Minister. He spoke in English.
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by John Helmer - Monday, July 27th, 2009
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By John Helmer in Moscow
Severstal, the Russian steelmaker owned by Alexei Mordashov (pictured), sought today to play down a rating downgrade by Fitch, issued earlier this week. At the same time, the company has removed the head of its loss-making North American division; and announced that in Italy, where its Lucchini steel operations are also loss-making, Mordashov has been awarded the Italian state’s Order of Merit.
According to Fitch, it has reduced Severstal’s Issuer Default Rating from BB- to B+, and put the company on watch for possible further downgrades over the next six months. The reason, according to a release by the ratings agency, is “Fitch’s expectation that the current global recession will have a significant negative impact on Severstal’s operating performance and credit metrics….Fitch now does not expect that Severstal will be able to regain a “through-the-cycle” credit profile consistent with the ‘BB’ rating category within 18-24 months of the trough of the current recession.” Fitch also said there is “uncertainty regarding the outcome of negotiations with lenders in respect of potential covenant breaches under its various facilities.”
A source inside Severstal told CRU Steel News: “If you look at other similar ratings, you will see Severstal keeps at the general level of the sector”. The source noted that recently the company has shown positive results, as steel volumes have grown, adding: “the rating agencies are in doubt whether Severstal will be able to keep at that level further.”
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by John Helmer - Thursday, July 23rd, 2009
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By John Helmer in Moscow
While unpaid Russian workers on shore petition for Prime Minister Vladimir Putin’s help,block highways, or appeal for media coverage, Russian seamen have used a very old weapon to claw back their pay from Russian shipowners — their trade union. The union campaign at sea is without precedent on land.
Russia’s seamen said this week they are expecting to collect additional wage arrears, owed by shipowners, of at least $300,000, on top of the $400,000 already collected in this month’s campaign by the Russian Seamen’s Trade Union and the International Federation of Transport Workers (IFT).
Nikolai Sukhanov, head of the Russian union’s branch at Nakhodka, on the Sea of Japan, told Fairplay last week’s enforecement action took three months of preparation, and netted $400,000 in court-enforced collections from Russian shipowners on the mainland. He said $230,000 is still to be paid. He is expecting another $70,000 in arrears from owners of vessels in South Korea, and an unspecified sum from Japan, where 11 vessels were identified by IFT inspectors to be in violation of pay contracts, and are now under arrest orders to pay up.
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by John Helmer - Wednesday, July 22nd, 2009
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By John Helmer in Moscow
The St. Petersburg fight over port terminal andshipping assets has taken a muscular turn, as police raiders, acting at the behest of Bank St. Petersburg, appear to be grabbing assets worth more than a bank valuation allows, and despite a court order invalidating the seizure.
Vitaly Arkhangelsky’s Oslo Marine Group (OMG) says it came under attack at its St. Petersburg headquarters last week,when police ordered personnel out of their offices and started searching office files. Arkhangelsky told Fairplay it was the latest in a series of property raids and asset seizures, which began last month, and involve OMG shipyard, vessel, and port terminal businesses.
Arkhangelsky, 34, blames Bank St. Petersburg (BSP), for improperly seizing assets for non-payment of loans amounting to Rb4 billion ($125 million). He says the asset seizures exceed the value of the loans, adding that at least one of the loan pledge agreements between his group and the bank has been nullified by a local court ruling. But since then, Arkhangelsky adds, BSP has refused to return the West Terminal, a St. Petersburgcargo shipping facility, which BSP grabbed on June 20. Three days later, on June 23, says Yelena Murgina, a spokesman for OMG, a St. Petersburg court ruled that the pledge agreement of the terminal was null and void.
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by John Helmer - Tuesday, July 21st, 2009
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By John Helmer in Moscow
The reason for an unexpected Chinese advertisement for a billion-dollar iron-ore and steel complex in a remote part of Siberia became clear in Moscow today. It reveals that, starved for cash as most Russian metal and mining companies currently are, they aren’t yet prepared to let the Chinese build competing mines and steelmills on Russian territory.
According to sources at the federal Ministry of Natural Resources in Moscow, and at the Department of Metal Mining Industry in the Transbaikal Territory administration (Chita region), the Xiyang Group sent a company delegation to Moscow this month to try to head off the revocation of the mining licence it holds for an iron-ore deposit in the region, near the Chinese border. The Chinese were officially warned that the licence for the Berezovskoye iron-ore deposit, which was awarded on May 14, 2005, requires investment of Rb16.8 billion (currently $542 million).
The iron-ore deposit is located about 20 kilometres from the Chinese border. Known to Russian geologists since the Soviet period, the deposit is estimated to hold up to 750 million tonnes of iron-ore. Expert studies have identified special problems with processing this ore into concentrate, and thus for consumption by steelmaking blast furnaces. This, together with the remoteness of the location for electricity, coking coal supply and rail connexion, have deterred development in the past.
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by John Helmer - Tuesday, July 21st, 2009
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By John Helmer in Moscow
Silvio Berlusconi, the Prime Minister of Italy, has named a bed in his Roman home, Palazzo Grazioli, after the Prime Minister of Russia, Vladimir Putin, according to a conversation Berlusconi had last November with a young lady he was inviting to join him in the bed. The bed itself is described as having curtains.
The house belongs to a family of grain-grinders and bakers, who took cash from the ladies they married and invested it in land that grew the grain they used to mill and bake. They did well, and celebrated by buying the house, which they then redecorated in the 1860s.
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by John Helmer - Tuesday, July 21st, 2009
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By John Helmer in Moscow
Court documents and testimony, presented recently in the Colorado District Сourt in Denver, expose substantial new evidence that LUKoil has operated a significant business in the state. The new evidence, secret until now, stretches back for ten years, and shows a flow of cash every month from an alleged front company in Colorado to a LUKoil company in Israel. The evidence reinforceS the likelihood that LUKoil and its Russian subsidiary, Arkhangelskgeoldobycha (AGD), will be ordered to face trial on charges of defrauding Archangel Diamond Corporation (ADC) of its rights to develop the Grib diamond mine project.
ADC is a Toronto-registered company which in 1996, in partnership with AGD, discovered the Grib pipe in the Verkhotina licence area of Arkhangelsk. Drilling, sampling and assaying by De Beers have estimated the value of the diamond deposit at between $8.2 billion and $9.7 billion at the diamond prices prevailing in the first quarter of 2008. ADC’s stake in the original project was 40%. Through a cutout in Luxembourg, De Beers holds a control stake of 54% in ADC, plus a $10 million loan that was called for repayment in May.
In addition to its stake in the future Grib mine project, ADC’s biggest current asset is its US lawsuit against LUKoil. This claims recovery of $30 million in investment, $400 million in ADC’s share of profits, and another $800 million in potential profits.
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by John Helmer - Monday, July 20th, 2009
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By John Helmer in Moscow
Far Eastern Shipping Company (Fesco), the third largest of Russia’s fleet companies and the dry-cargo leader, reveals plummeting profit for last year will be followed by loss-making this year.
The bad news has taken some time to be disclosed by the publicly listed shipping company, which operates a fleet of 63 vessels, with an aggregate 866,000 tonnes in deadweight. A writedown of $166 million was taken in fleet value for the year. 52 of the vessels are mortgaged to secure loans from ING, Calyon, Citibank, and Vneshtorgbank. In all, Fesco’s liabilities total just over $1 billion, with $541 million classified as due for short-term repayment.
The company said it is planning on a $150 million loan coming through from the European Bank for Reconstruction and Development (EBRD). However, Richard Wallis, an EBRD spokesman, revealed to Fairplay that there is no sign of loan approval or the required preliminaries. “The EBRD cannot disclose confidential information about due diligence that might have been carried out regarding any company”, Wallis said. A year ago, the London-based EBRD paid $120 million for a 3.77% shareholding in Fesco. The EBRD has now lost most of its investment on paper: the stake is currently worth $32 million. After verifying that nothing new has been posted on Fesco since then, Wallis added: “I am declining to comment on any potential project until it appears as such on the EBRD website.”
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by John Helmer - Thursday, July 16th, 2009
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By John Helmer in Moscow
Loose Canadian stock listing rules, a compliant exchange regulator, and rubber-stamp directors have made it easy for a Russian raider to attack minority shareholders of High River Gold (HRG:TX), and threaten them with dilution and delisting, unless they give in to a low-ball buyout offer. That is what minority shareholders of High River Gold are this week charging against the majority shareholder, Alexei Mordashov, and his Moscow-based Severstal Resources group. But because at least some of the institutional minority stakeholders are powerful Russians – maybe as powerful as Mordashov — the outcome of the tussle over HRG may be decided in Moscow, not Toronto.
So far, Mordashov has instructed his appointees Nikolai Zelensky, the chief executive of HRG, Alexei Khudyakov, the HRG board chairman, and Alexander Grubman, a newly appointed chief executive at Severstal Resources, to apply maximum pressure on the minorities to accept a buyout offer of 22 Canadian cents per HRG share. Mordashov has started with an estimated 57%; the minorities with 43%. The offer started on May 22 at 18 cents, and was raised to 22 cents on June 9. The deadline for acceptances is July 31. Two weeks later HRG issues its first-half financial results. The deadline for the purported review of delisting by the Toronto Stock Exchange is August 18.
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by John Helmer - Thursday, July 16th, 2009
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