(Fixes typo in first paragraph)
By Sandrine Bradley
LONDON, June 11 (Reuters) - 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)