Petropavlovsk files for administration
By Abigail Townsend
Date: Tuesday 12 Jul 2022
(Sharecast News) - Shares in Petropavlovsk were suspended on Tuesday after the indebted gold miner went into administration.
The Russian firm, which is based in Moscow and listed in London, has appointed Opus Business Advisory Group as administrator, and will seek a hearing at the High Court "in the coming days".
Petropavlovsk was dealt a severe blow after the UK imposed sanctions on Gazprombank, its main lender, in response to Russia's invasion of Ukraine. The bank demanded the immediate repayment of a $201m loan in April, before assigning the rights to the debt to Russian metal producer UMMC-Invest.
Petropavlovsk remains unable to repay the loan and said it was "very unlikely" that it would be able to refinance it in the short term "and has to date been unable to do so". It also has $304m of principal outstanding on a bond which is due in December.
In a statement due to be filed with the High Court, the firm stated that as at 30 June, it had assets amounting to around $1.62bn and liabilities, including contingent and prospective liabilities, of $1.7bn.
Since April the company has been exploring a possible sale, and has received an offer from one unnamed party to acquire, and a proposal from another expressing interest.
But it warned: "Discussions are ongoing. There can be no certainty that either will result in a sale, and it is highly unlikely that there will be any returns to shareholders given the level of the group's indebtedness."
Petropavlovsk debuted on AIM in 2002 before moving to the main market in 2009. Its main operating mines are located in the Amur region in the country's far east.
The shares, which have lost 94% of their value this year, were suspended at 1.2p. Petropavlovsk has also requested that trading in its Moscow-listed shares is halted.
Danni Hewson, financial analyst at AJ Bell, said: "The game looks to be up for Petropavlovsk, which is set for an ignominious end brought about by the Ukrainian conflict. The Russian gold miner has been under acute financial pressure linked to sanctions, unable to sell its gold or pay its debts, and a company which once had a place in the FTSE 100 looks set to leave shareholders with noting.
"This is a reminder of the risk of investing in resources firms with assets in questionable jurisdictions, particularly if they only operate in one territory."
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