Page 13 - FSUOGM Week 40 2021

FSUOGM PROJECTS & COMPANIES FSUOGM

Zoltav shares tank after it warns

of potential delisting

RUSSIA LONDON-LISTED junior Zoltav announced project finance is that the company will have to
on October 4 it had secured debt financing to substantially reduce its costs.”
Zoltav could delist itself commercialise a cluster of gas fields in Russia’s Zoltav has been struggling financially, in part
and relinquish some Saratov region, although the company’s share because of the drop in oil prices last year. It has
licences. price took a dive as it announced cuts to over- been unable to repay or refinance a shareholder
heads and a potential delisting. loan, and were it not for the new financing it
The company said in a stock filing that it would have been unable to service its current
had secured debt financing from Russian state loans, including credit payments to Russia’s
lender Sberbank to develop eastern fields at the Promsvyazbank that are due at the end of the
Bortovoy licence in Saratov. It has secured one month.
credit facility worth RUB7.7bn ($106mn) which “In light of this, it is important to the board
it will spend on the project, and a second of that we, together with management, evaluate all
RUB700mn that it will use to pay VAT on cap- alternative options to finance corporate over-
ital expenditure. The repayment periods for the heads and find a solution which will be in the
loans run to September 25, 2031 and January 1, best interests of the company and its sharehold-
2024 respectively. ers as a whole,” Verny said.
So far only two fields – Zhdanovskoye and The financing will restrict intra-group
Karpenskoye – have been developed at Borto- transfers and cash outflows from Zoltav’s main
voy, and their reserves have reached 70% and operating subsidiary, the company said, which
40% depletion respectively, with production will force it to “materially reduce corporate
set to become uneconomical within two or overheads and streamline costs unrelated to the
three years. project.”
There are seven other undeveloped fields The company warned it would struggle to ful-
at the licence, and Zoltav aims to bring five fil its licence obligations at the Koltogor licences,
of them online between 2022 and 2030. The which could result in its rights being revoked. It
first to start up is scheduled to be Pavlovskoye, would also find it difficult to maintain its offshore
in February 2022, followed by Lipovskoye in corporate structure and its AIM listing. It will
July 2022, Nepryakhinskoye in March 2023, conduct a thorough analyst of its other options,
Mokrousovskoye in 2028 and West Lipovskoye but the company said it would likely have to del-
in 2030. ist its shares after a few months.
The project will require the construction of a In the meanwhile, Zoltav is seeking approval
206-km pipeline and an expansion at the Karp- to issue new shares at GBP0.27 apiece to share-
enskoye gas processing plant, raising its capac- holders, in order to repay the previous loan.
ity from 525 and 900mn cubic metres per year. Shares in Zoltav were down 24% within
Zoltav estimates the overall cost of the develop- two hours of its announcement at GBP0.26.
ment at RUB12.3bn. The company’s main shareholders are Arkady
While welcoming the financing as “both Abramovich, son of Russian billionaire and
exciting and critical for the company to ensure Chelsea FC owner Roman Abramovich, and
its future prosperity,” Zoltav chairman Lea Verny another Russian businessman called Valentin
warned that “an indirect consequence of the Bukhtoyarov. ™

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