“Deripaska’s Rusal fears default due to U.S. sanctions


The company’s shares on the Hong Kong Stock Exchange fell in value by 50%. Deripaska’s fortune dropped by more than $1.3 billion after sanctions were imposed

UC Rusal, whose majority owner is Russian billionaire Oleg Deripaska #50 , warned investors of the possibility of a technical default due to sanctions imposed on Friday, April 6, by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).

“The company assesses that OFAC sanctions could result in technical defaults with respect to certain of the group’s credit obligations, and the company is currently evaluating the likely impact of such technical defaults on its financial position,” the company said in a statement to investors posted Monday, April 9, on the Hong Kong Stock Exchange.

“The company believes that its inclusion on the SDN list (all U.S. counterparties are prohibited from any economic ties with the company) could result in technical defaults on certain loans and bond issues,” the statement clarified.

The company said it maintains all credit and financial covenants, including debt repayment obligations, and intends to continue meeting its obligations in accordance with legal and regulatory requirements.

The published message caused UC Rusal’s shares to plummet on the Hong Kong Stock Exchange. On the morning of April 9 the shares were down more than 50% compared to the close of trading on Friday, April 6. As of 15:30 on April 9 local time (10:30 Moscow time) UC Rusal shares were traded at 2.32 Hong Kong dollars per share.

At the opening of trading on the Moscow Stock Exchange, Rusal’s shares plunged 46.9% on the company’s warning of a possible technical default. After that (from 10.22am) trading in Rusal’s shares was switched to the discrete auction mode because the current price of ordinary shares fell by more than 20% for 10 minutes in a row during the trading session from the previous trading day’s closing price. Trading returned to normal mode at 10:52.

On Friday, April 6, the U.S. Treasury Department published a list of Russian businessmen, top officials and companies subject to restrictive measures under the Countering America’s Adversaries Through Sanctions Act (CAATSA).

The sanctions were imposed on seven Russian oligarchs, 12 companies they own or control, and 17 high-ranking Russian officials. The sanctions list also includes defense companies working for export and one bank.

In addition to Oleg Deripaska, the sanctions include the owner of Renova, Viktor Vekselberg # 22 Stub
Victor Vekselberg Place in Forbes’ rating: 22, Senator Suleiman Kerimov #28, co-owner of Surgutneftegaz Vladimir Bogdanov #76, son of Arkady Rotenberg #53, chairman of the board of directors of EnPiVi Engineering Igor Rotenberg #129, co-owner of Sibur Kirill Shamalov #151 and co-owner of USM Holdings Andrei Skoch #26. 

On April 7, the day after the sanctions were announced, Oleg Deripaska’s official representative sent Forbes the billionaire’s words about the incident.

“The events that happened yesterday are unpleasant, but not unexpected. The grounds for my inclusion in the sanctions list are absolutely baseless, ridiculous and simply absurd,” Deripaska said.

He noted that he is preparing to celebrate Easter Day, which is celebrated by all Orthodox Christians on April 8. “Already after that we will analyze the situation with lawyers and provide our comment,” the billionaire said in a statement. After the sanctions were imposed, Deripaska lost more than $1.3 billion; on the morning of April 9, his fortune in Forbes real time is estimated at $4.9 billion.

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