Severstal failed to pay off bonds from sanctions against Mordashov

The London office of Citibank refused to make a payment to Severstal for $12.6 million on Eurobonds worth $800 million maturing in 2024. The company announced this.

Severstal was supposed to redeem this coupon on March 16th. As part of the new currency control measures in RUSSIA, the company received permission from a special commission under the Ministry of Finance to make such a payment. But on February 28, the main owner of the company, Alexei Mordashov, along with other Russian businessmen and politicians, found themselves under EU sanctions in response to the launch of a Russian military special operation in Ukraine.

“Given recent developments around the company, we have reason to believe that Citibank, acting as the principal paying agent and transfer agent and bank of the account in respect of the bonds, may refrain from making a payment initiated by the company in accordance with the terms of the loan and documentation for bonds,” Severstal said in a statement published on Wednesday, March 16.

On the same day, the company, despite "possible restrictions", made a trial payment of 1% of the bond coupon ($126,000). “If this payment is made in accordance with the terms of the loan and the documentation for the bonds, the company intends to transfer the remaining part of the interest amount,” she explained. In the event that the test payment is not made, Severstal will use "alternative options" to pay interest on the Eurobonds, of which Citibank and bondholders will be informed.