May 19, 2018 / 12:35 PM / a month ago

Exclusive: Sanctions-hit Vekselberg repays 1 billion Swiss franc credits to Western banks

(This May 19 story corrects figure in ninth paragraph to 720 million Swiss franc (not 750 million Swiss franc)

FILE PHOTO: Chairman of the Board of Directors of Renova Group Viktor Vekselberg speaks during a session of the Gaidar Forum 2018 "Russia and the World: values and virtues" in Moscow, Russia January 17, 2018. REUTERS/Sergei Karpukhin/File Photo

By Brenna Hughes Neghaiwi and Polina Ivanova

ZURICH/MOSCOW (Reuters) - Sanctions-hit Russian oligarch Viktor Vekselberg and his Renova Group have repaid loans amounting to over one billion Swiss francs ($1 billion) to banks including JPMorgan (JPM.N), Credit Suisse (CSGN.S) and UBS (UBSG.S), Renova and a source familiar with the matter told Reuters on Saturday.

Vekselberg was placed under sanctions in a crackdown by the United States on President Vladimir Putin’s inner circle as retaliation for alleged Russian interference in the 2016 U.S. election. The banks had until June 5 to resolve the issue, when U.S. sanctions come into effect.

“The credit issue with the banks is finally resolved,” the source close to the matter said, adding certain finer details remained under discussion. “The banks have received the money.”

There had been worries over the possibility the loans, which were taken out using large stakes in Swiss industrial groups Schmolz + Bickenbach STLNS>, OC Oerlikon (OERL.S) and Sulzer (SUN.S) as collateral, could lead to a broad selloff of the shares if a solution wasn’t found by June 5.

Were the loans not repaid, the banks could declare an enforcement event allowing them to sell the shares held as collateral. In the case of a mandatory prepayment event the banks would be allowed to conduct a managed sale.

SWISS FIRMS IN CROSSFIRE

Liwet Holding, the Swiss investment vehicle of Vekselberg’s Renova Holding, used to invest in the Swiss companies, took out a syndicated loan in December 2017 for 720 million Swiss francs from banks Natixis (CNAT.PA), Credit Suisse, ING, Deutsche Bank (DBKGn.DE), JP Morgan and UBS, documents from the Swiss Takeover Board show.

Another Swiss-based investment vehicle for Renova, Tiwel Holding, took out a separate 350 million franc credit from the same banks minus UBS in July 2016, according to a separate Takeover Board filing. Sources, however, placed the size of the repaid credit at 310 million francs.

While such deals are generally confidential, the Swiss Takeover Board had published details of the financing agreements in documents relieving creditors from obligations to make mandatory tender offers for the respective firms.

25.51 percent of voting rights in Schmolz + Bickenbach and 41.35 percent of voting rights in OC Oerlikon were named as collateral on the 720 million franc loan.

A 21.29 percent stake in Sulzer was named as primary collateral against the 350 million franc loan, while a 42.14 percent stake — owed as principal collateral on a separate Sberbank loan — was named as secondary collateral.

It is unclear how these conditions were affected by Vekselberg’s stake reduction in the firm.

The firms, in which Vekselberg holds a stake, have experienced a variety of fallouts since Washington announced impending Russian sanctions, including a brief trading halt and business disruption at previously Renova majority-owned Sulzer, board changes at Schmolz + Bickenbach and inquiries from financiers. Vekselberg has cut his holdings in the firms.

RUSSIAN ASSISTANCE

In early May, Renova received a credit line from Russia’s Promsvyazbank to support the business after it was hit by U.S. sanctions, Russia’s finance ministry said.

Swiss paper Schweiz am Wochenende earlier on Saturday reported Russian banks had agreed to take on Liwet’s 720 million franc loan.

The Renova spokesman said the group repaid loans from its “own sources”.

Reporting by Brenna Hughes Neghaiwi and Polina Ivanova, Editing by William Maclean

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