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As many as 23 of Sovcomflot’s 122 vessels sold by lenders to recover loans to the troubled company before the May 15 deadline
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Sovcomflot had US$2.4 billion of net debt at the end of last year, but money owed to international banks was not known
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Dutch bank ING reportedly the main agent on most of Sovcomflot’s debt facilities
Russia’s national tanker company, Sovcomflot, and its western lenders have sold as many as 23 of its 122 vessels to repay debts and be able to return to international markets when sanctions end, according to reports.
Sovcomflot undertook the sales to meet the European Union’s May 15 deadline for financial institutions to unwind their business with the Russian shipping company and other sanctioned Kremlin corporations.
Annual accounts show that Sovcomflot had US$2.4 billion of net debt at the end of last year, but it is not known how much of this is owed to international banks and whether it could use its US$644 million of cash to repay its bank loans.
Its profit for 2021 plunged to $61.1 million, 79.4% less than the $300.6 million reported in 2020.
Media reports vary on the number of Sovcomflot vessels sold by its lenders, with lloydslist. maritimeintelligence.informa.com reporting on May 18 that the company had sold at least 23 vessels and that more were being offered by its lenders.
UK News Today, quoting people familiar with the matter, said Sovcomflot’s ship disposals were meant to save it from defaulting on debt, which could trigger bad loans on the banks’ balance sheets that could damage its reputation with creditors and oil majors including Shell and Total.
The report said four natural gas tankers were sold by Dutch bank ING to Eastern Pacific Shipping owned by Israeli billionaire Idan Ofer. Four other vessels are now held by vehicles set up by Greek mogul Evangelos Marinakis, it added.
ING was the main agent on most of Sovcomflot’s debt facilities. Other western banks that have been trying to reduce their exposure to the company include Citibank, Société Générale, KfW and Crédit Agricole.
In a reprieve for the troubled company, the UK government announced that it has extended its deadline to June 30 to end business with Sovcomflot and other indebted Russian enterprises.
In a further blow to the Russian shipping giant, Cyprus has deflagged Sovcomflot, leaving it with no European operations after it shut its 150-strong-staff office in Limassol earlier this month, the Lloyd’s List report said.
Sovcomflot has faced difficulties in concluding charters as ports, end-purchasers, marine insurers and other freight companies pull back from Russian business amid sanctions imposed following Moscow’s invasion of Ukraine.
Reuters said the company owns and operates 122 vessels, including 50 crude oil tankers, 34 tankers for transportation of oil products, 14 shuttle tankers, 10 gas carriers and 10 icebreakers.
Sovcomflot’s action contrasts with Kremlin-owned Gazprom, which risks breaking long-term obligations with some European customers over gas contracts.
