(Fixes typo in first paragraph)
By Sandrine Bradley
LONDON, June 11 NLMK, one of Russia's
larget steelmakers, has cancelled its request for a syndicated
loan of around $400 million after cutting its capital
expenditure plans as EU and US sanctions against Russia bite,
bankers said on Wednesday.
The continuing decline in the Russian economy and the
political fallout between Russia and the West after Russia's
annexation of the Crimea in March has led the company to
reconsider its plans, the bankers said.
"NLMK decided it didn't need the funds. Companies across the
board in Russia are cutting capex (capital expenditure) plans as
they realise they will not be able to get the revenues to
justify them," one of the bankers said.
The additional sanctions clauses now required by banks in
the loan documentation as a result of US and EU sanctions
imposed on Russia also played its part in NMLK's decision to
walk away, the banker said.
"There were long discussions around the additional
sanctions clauses required which didn't help," the banker added.
NLMK is an infrequent visitor to the loan market and bankers
pointed out that its loan request was purely opportunistic. The
company was looking to tap the market at the beginning of the
year for cheap money because lenders were keen to deploy cash.
"We decided early on not to do this deal because the initial
pricing talked about was quite tight. This was very much an
opportunistic play by NLMK," a second banker said. "I think the
situation then just got too complicated."
NLMK could not be immediately reached for comment.
The company's last syndicated loan was agreed in August
2011, when it signed a 400 million euro ($544.60 million),
four-year facility via coordinating bookrunner Deutsche Bank.
NLMK is rated BB+ by S&P, Baa3 by Moody's and BBB- by Fitch.
($1 = 0.7345 Euros)
(Editing by Christopher Mangham)