PJSC ALROSA (the Company) provides the following update on the coupon payment of $7,750,000 due 25 June 2022 on $500,000,000 Eurobonds issued by Alrosa Finance S.A. (Luxembourg) (the Issuer) and maturing in 2027.
The Issuer has two outstanding Eurobond issues for $500,000,000 each with maturities in 2024 and 2027 and annual coupon rates of 4.65% and 3.1%, respectively, with the Company acting as the guarantor for both (the Notes).
The Company remains financially sustainable and, as a trustworthy capital market player, confirms that it is ready to fully meet its obligations under the Notes and has the necessary funds. ALROSA’s Net Debt / EBITDA ratio as at the end of 2021 was 0.4x.
However, circumstances beyond the Company’s control prevent the upcoming $7,750,000 coupon payment on the 2027 Notes.
The US and UK sanctions against the Company
On 24 March 2022, the UK imposed blocking sanctions against ALROSA, freezing the Company's assets.
The US enacted blocking sanctions against the Company on 7 April 2022, including it in the Specially Designated Nationals (SDN) list.
Under the US and UK sanctions laws, these restrictive measures apply to the Issuer as the Company’s subsidiary, affecting its activities.
The impact of sanctions on the fulfillment of obligations under the Notes
Due to the sanctions imposed on the Company and the Issuer, as well as other restrictive measures introduced by the US, EU and UK against the Russian Federation and Russian entities, foreign counterparties and companies processing Note payments are currently unable to process such payments for the Company and the Issuer. Therefore, it is currently impossible to make payments on the Notes. In particular, Euroclear and Clearstream, which are the European clearing centres for the Notes, stopped processing transactions with Russia’s National Settlement Depository (the NSD) due to the EU’s blocking sanctions against the NSD imposed on 3 June 2022. DTC, the US clearing centre for the Notes, took a similar approach.
The Company is fully committed to its payment obligations under the Notes and will immediately and duly meet them with respect to all Note holders equally once the regulatory restrictions are lifted.
The Company makes every effort to protect the interests of the Note holders.
Specifically, on 29 March 2022, ALROSA filed an application with the Office of Financial Sanctions Implementation (the OFSI) for a special license allowing the Company to make coupon payments on the Notes in line with the issue documents (the Application). The OFSI license would allow UK financial institutions and other entities subject to UK sanctions, including the principal paying agent, to conduct normal processing of payments to Note holders. As of today, we have not received the OFSI license.
