March 19, 2019 / 11:29 AM / 5 months ago

Russia's Evraz says share sales by Abramovich and partners lower sanction risks

MOSCOW (Reuters) - Russian steel company Evraz said a decision by Roman Abramovich and his partners to sell some of their shares in the group would reduce sanctions risks.

FILE PHOTO: Chelsea owner Roman Abramovich applauds fans after winning the Premier League in 2017. Reuters / Hannah McKay Livepic

Chelsea soccer club owner Abramovich, businessman Alexander Abramov and other top Evraz shareholders sold around 25.4 million shares in Evraz on Monday, raising some 151 million pounds ($200 million).

Their sale of a total stake of 1.8 percent brought Abramovich and Abramov’s combined stake in the company to less than 50 percent, Evraz chief financial officer Nikolay Ivanov said on Tuesday.

“In my opinion (this) further decreases risks of the introduction of sanctions on Evraz,” Ivanov said on a conference call, adding that Evraz had recently changed its ownership structure in a way that would also reduce sanctions risks.

Shares owned by Abramovich and his partners were previously held collectively by one legal entity but were now spread across different entities, Ivanov said. “So if the sanctions will be introduced against one of our key shareholders, Evraz will be significantly less vulnerable to that.”

The United States and other Western countries have imposed sanctions on Russian officials, companies and banks since Moscow’s annexation of Crimea in 2014, and the campaign continues to gather force.

As recently as last Friday the United States, Canada and European Union imposed fresh sanctions to punish Russia for its 2018 attack on three Ukrainian ships as well as its annexation of Crimea and its activities in eastern Ukraine.

Major investors in at least four Russian companies have already offloaded, or said they would offload, some of their holdings this month.

NOTHING BUT SANCTIONS

Abramovich and his partners last week sold $551 million of shares in mining group Norilsk Nickel. The shares represented a 1.7 stake in the company and were mostly bought by British-based investors.

An investment banker at a Western bank in Moscow told Reuters the reason behind the share sales at Evraz was “nothing else but sanctions,” without elaborating.

Other investment bankers said shareholders’ decisions to offload some of their shareholdings could also in part be linked to market conditions.

“He (Abramovich) is getting rid of cyclical assets at maximum prices that could suffer most from a cyclical downturn,” said Kirill Tremasov, head of research at Loko-Invest and former director of the Russian Economy Ministry’s forecasting department. “Shares in both (companies) are at highs.”

A representative for Abramovich said he had nothing further to add. Evraz said it does not comment on its shareholders’ actions. Reuters could not immediately reach Abramov’s representatives for comment.

Evraz shares traded down 5.3 percent by 1345 GMT, having spiked to a record 634.8 pence the previous session. Norilsk Nickel shares were virtually unchanged.

Abramov, co-owner of Abramovich’s Cyprus-based company Crispian that sold the stake in Norilsk Nickel last week, said it had been sold because prices were good.

Evraz, which is listed on the London Stock Exchange, has operations in Russia, the United States, Canada and other countries. It is one of the world’s top steel producers based on crude steel production.

Reporting by Gabrielle Tétrault-Farber, Polina Ivanova, Olga Popova, Elena Fabrichnaya and Anastasia Lyrchikova; Writing by Gabrielle Tétrault-Farber; Editing by David Holmes

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