- Sovcomflot is selling ships to buyers in Asia and the Middle East to pay off loans to Western banks.
- According to the WSJ, the deals come before Sunday’s deadline for EU companies to stop doing business with Russia.
- As Russia’s largest shipping company, it operates 122 ships, including oil and gas carriers.
- For more stories, visit www.BusinessInsider.co.za.
Russia’s leading shipping company has sold ships to buyers in Asia and the Middle East to pay off its loans to Western banks.
The Wall Street Journal and Lloyd’s List were the first to report the story.
Sovcomflot sold five oil tankers to Dubai-based Koban Shipping and four natural gas carriers to Singapore-based Eastern Pacific Shipping, according to the report.
The move comes as the company tries to comply with sanctions imposed by the European Union, which has set a Sunday deadline for companies to stop doing business with Russia.
The deadline means that banks must receive all outstanding loans before that date. Sovcomflot’s exposure, according to the most recent data, stood at $2.1bn (R34bn) of debt, according to Lloyd’s List.
However, the magazine also reported that Chinese buyers are also known to be interested in acquiring vessels and are in negotiations.
Sovcomflot did not immediately respond to Insider’s request for comment made outside of normal business hours.
On April 25, the company announced in a statement that it was committed to paying its Eurobond. The company included its two outstanding Eurobond issues, totaling $928 million (R15 billion), maturing in 2023 and 2028.
Eastern Pacific, which bought natural gas ships, paid $700 million (11.3 billion rand) to a bank that took over the ships, according to the WSJ.
Maritime intelligence magazine Lloyd’s List previously reported that the company was seeking to sell up to a third of its fleet.
A senior banker believed to be involved in negotiations with Sovcomflot told the magazine: “Basically all banks and charterers have until May 15 to terminate contracts, which means Sovcomflot has a very short window to pay off the loans and realistically there’s only one way you can do that and that’s to sell the boats.”
According to the magazine, a senior industry official with direct knowledge of the deals said 40 of Sovcomflot’s entire fleet is being discussed with buyers from Dubai and China.
A senior banker told Lloyd’s List: “Paying off the loans before the deadline is clearly the immediate trigger behind the fleet sale, and it seems clear that Sovcomflot is preparing for an eventual future return to the market.”
They added: “But there is also likely to be a calculation here of how many ships it will need to trade under the sanctions regime for the foreseeable future.”