VTB to get Magomedov’s share in TransContainer

VTB to get Magomedov’s share in TransContainer

RBC has learned that VTB will get Ziyavudin Magomedov's share in the largest operator TransContainer (25.07%) for debt. After that, the strategic investors – namely the structures of Roman Abramovich or Vladimir Lisin – will buy this package.

This week, VTB Bank may receive a stake in TransContainer, the largest rail container operator owned by FESCO (25.07%). Two sources close to FESCO and TransContainer shareholders have told RBC. The bank will receive the package for debts and then VTB will sell it to its strategic partner, the sources said. “It is structurally correct, but I have no idea how much time it will get,” one of them said.

Chairperson of the board of directors of FESCO Leyla Mammedzade, who manages the assets of businessman Ziyavudin Magomedov (who owns 32.5% FESCO), said in an interview with RBC, which was published on Monday, October 15, that the company is now in the final stage of negotiations on the sale of its stake in TransContainer. She did not tell the name of the buyer but noted that proceeds from the transaction would be spent to repay FESCO’s debts. “I very much hope that by the end of 2018, the company's debt/EBITDA ratio will decrease to the values we promised the banks [below four EBITDA],” she said.

FESCO’s package in Transcontainer was deposited to VTB under the repo transaction from December 2014. In addition, at the end of 2017, VTB opened a $680-million credit line for the company, most of these funds were spent to pay Eurobonds ($551.7 million) to holders of the company. However, in February 2018, the company had a technical default on ruble bonds by failing to fulfill its securities obligations by 6.375 billion rubles ($97.4 million). Until the completion of debt restructuring, the company postponed the publication of financial statements under IFRS for 2017 (the last published report of FESCO was in the first half of 2017).

VTB and FESCO representatives have refused to comment on the situation.

Since March 30, Magomedov has been under arrest on charges of Organization of a Criminal Community. The stake in TransContainer was estimated without a discount for the VTB transaction, one of RBC sources said. FESCO’s management presented “several offers with commercial terms” to the board of directors for the sale of a stake in TransContainer, all of which were “strictly in the market and did not involve any discount,” Mammedzade told RBC. On Tuesday, October 16, 25.07% of TransContainer cost 15.7 billion rubles, or about $240 million, on the Moscow Stock Exchange.

TransContainer is the largest railway container operator in Russia. At the end of 2017, the company transported 1,777 million TEU (equivalent to a 20-foot container), which is 46% of the total traffic. Under IFRS, the company’s net profit in 2017 was 6.5 billion rubles ($99.2 million), which is twice as much as in 2016.

TransContainer will be Magomedov's second asset taken for debt by VTB. In early August, the bank became the owner of 22.25% of the Novorossiysk Bread Products Combine (NKHP), and on August 29, it received permission from the Federal Antimonopoly Service to purchase another 10.93%, which was also transferred as part of debt settlement. But in both cases, the bank will be the temporary owner, RBC sources say. According to them, the main applicants for a share in the railway operator are Roman Abramovich and Alexander Abramov’s Enisey Capital, which acquired 24.5% of TransContainer in December 2017 and announced its intention to increase its stake, as well as Vladimir Lisin’s UCL.

A representative of Pervaya Gruzovaya Kompaniya (which is part of Lisin’s UCL) has declined to comment. The other day, he told RBC that “a substantive comment requires the knowledge of the terms of the transaction, and they are not yet known.” A representative of Abramov’s Invest AG (operational partner at Enisey Capital) has neither provided a comment.

The main contenders for FESCO’s share in TransContainer decided to wait until this package becomes the property of VTB. Clearly, they do not want to conclude a transaction with a company affiliated with the businessman who is accused under a very serious article of the Criminal Code, Director of AKRA Group of Corporate Ratings, Maksim Khudalov, told RBC. After the package has a different owner, it can be considered ‘clean,’ or free from any encumbrances, he added.

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