Gazprombank and Dmitry Bakatin sell 29.9% of IRC iron ore company for $ 96 million
Axiomi Consolidation, a structure of Nikolai Levitsky, owner of “Deki” (creator of yeast brands “Nikolai” and “Stepan Timofeevich”) and former owner of the oil service “Geotech”, acquired 24.1% of the iron ore company IRC. The shares were bought out by Cerisier Ventures Limited, a member of Gazprombank (GPB), Axiomi reported on December 30. The deal amounted to $ 76.8 million.
The same Axiomi Consolidation and Major Mining Partner, owned by Dmitry Bakatin, also sold their 5.8% stake in IRC for $ 19.2 million, the bank said. Bakatin is the managing director of Boris Yordan’s Sputnik investment group.
According to Levitsky, quoted by Axiomi, the acquisition of the IRC package is a promising investment. Axiomi is open to fruitful cooperation with other shareholders and partners of the company in the further development of the asset, he added.
IRC is the only iron ore producer in the Far East of Russia. The main asset of the company is located in the Jewish JSC Kimkan-Sutarsky GAK with a capacity of 3.2 million tons per year. It produces high quality (65%) iron ore concentrate for export to China.
Gazprombank in early December agreed to buy 24, 07% IRC. At the same time it became known that another 5.8% of IRC will buy Major Mining Bakatin (“Vedomosti wrote about it on December 9). Together, these 29, 9% belonged to the deal of the investment company Stocken Board, registered in Liechtenstein.
The largest shareholder of the IRC until December 2021 with a share of 31.1% was the gold mining company Petropavlovsk. On December 3, the Stocken Board acquired 29.9% of IRC in Petropavlovsk for $ 10 million. The agreement was signed in March 2020. The deal became mandatory after the agreement of GPB – the main creditor of Petropavlovsk and IRC. The debt of the latter in September 2021 was $ 118 million.
As a result of the deal, the gold mining company should be exempted from guarantees under IRC loan agreements, which the management of Petropavlovsk called the main purpose of the deal. In May 2021, Petropavlovsk reported that the GPB had given its consent to the deal and the agreement had become binding.
A spokesman for Petropavlovsk confirmed to “Vedomosti” that the main purpose of selling shares of IRC was to get rid of the guarantee on the debts of this company, which happened. Today, the main debt burden Petropavlovsk – commitments to repay Eurobonds by about $ 300 million, he said. The gold miner issued five-year bonds worth $ 500 million in November 2017. But in 2021, securities worth about $ 200 million were redeemed and redeemed, the interlocutor said. He stressed that the deal to sell IRC shares under the 2020 agreement and the resale of GPB shares are not related, and the gold miner about the latter “knows nothing.”
The bank bought its 24.1% IRC from Stocken Board for $ 30.6 million, the structure of Bakatin 5.8% for $ 2.34 million, according to the contracts. Thus, the Liechtenstein investment company sold its 29.9% ore miner more than three times more expensive than it bought. The deal was challenged by the largest shareholder of Petropavlovsk “Yuzhuralzolot” (YUG Yuri Strukov, owns 29.2%). The Southern Federal Republic stated at the time that it was not in Petropavlovsk’s interest, estimating the sold stake in the IRC at $ 100 million.
Petropavlovsk was forced to sell IRC, especially since the peak price of ore in the Chinese market has passed, says director of the NRA rating service Sergei Grishunin. According to him, the shareholder’s arrival in the mining business is not from the industry – a common phenomenon recently. For example, Roman Tratsenko and Albert Avdolyan came to coal mining, and a pipe metallurgical company mined gold.
“The attractiveness of commodity markets is high for investors with low mining experience. It is possible that in the future some of the assets acquired in this way will have to be resold. On the other hand, access to financial resources can allow the company to operate, ”the analyst told Vedomosti.