UWC shares fell 12% after default on subsidiary bonds

by time news

Shares of the United Wagon Company (UWC) were down 11.7% during trading on the Moscow Exchange on November 25, according to data from the trading floor. At a minimum of 12:13 Moscow time, the company’s securities were traded at around 87.5 rubles. per share, but then the decline slowed down. At 15:27 Moscow time, the share price was 93.9 rubles. for the paper.

The company’s shares fell significantly after the subsidiary structure of UWC – OVK Finance – made a technical default on bonds worth 16.34 billion rubles, follows from the disclosure of information about the company. On November 24, the company was supposed to pay investors the par value of bonds in the amount of 15 billion rubles. and pay a coupon in the amount of RUB 1.34 billion.

The press service of UWC told Vedomosti that OVK Finance does not have the funds to fulfill its obligations to bondholders. “Currently, negotiations are underway with bondholders on the timing and options for debt settlement. The default of UWC Finance does not create risks for UWC’s production activities and the fulfillment of the group’s obligations to customers and suppliers, ”UWC believes.

The default was made on series 01 bonds, which were placed by OVK Finance in 2013. As of September 30, the main owner of OVK is the non-core assets bank Trust (27.78%), owned by the Central Bank. Another 24.3% belongs to Otkritie Bank (also owned by the Central Bank), a 9.3% share belongs to the Uralvagonzavod concern, 15% belongs to Emil Perumov, 23.6% of the shares are in free circulation.

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The press service of “Trust” told “Vedomosti” that the bank is currently developing a plan of anti-crisis measures to resolve the situation. “Trust” will make every effort to further develop the asset. We also want to note that the situation with the technical default of OVK Finance will not affect the production process in any way. The company was operating with high accumulated debt at the time of the change in shareholding in 2019. The ongoing anti-crisis measures with the asset allow us to cover the main production needs, ”said a representative of the bank of non-core assets.

On July 19, the Expert RA rating agency downgraded the rating of OVK Finance to ruBB-, while changing the outlook from negative to stable. In its review, Expert RA reported that OVK Finance’s liabilities are represented by two bond issues totaling RUB 26 billion, and that the companies belonging to the UWC group are guarantors and offerors of OVK Finance’s bond issues. At the same time, the agency negatively assessed the liquidity of the entire group “due to the large volume of short-term loans and borrowings and the protracted generation of negative operating cash flows”, but pointed to a “moderate factor” in the form of support from the main shareholders of the group – Trust and Otkritie Bank “. “The allocation of the support factor is due to the precedent of providing financial support in the past, among the main measures one can single out: an increase in a credit line, refinancing, a deferral of loan payments, the regular provision of letters on the non-use of rights to early reclamation of loans in connection with violation of covenants,” the agency noted …

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In 2020, UWC built 16,600 freight cars, which is 20% less than in 2019. In 2021, UWC plans to produce about 16,000 units, in 2022 – 19,000-19,500. The company’s revenue in 2020 increased by 23.5% to 79.6 billion rubles, the net loss amounted to 22 billion rubles.

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