VTB ready to resell AGD Diamonds if asset transferred to bank, interested parties available

VTB is prepared to resell AGD Diamonds if the asset is transferred for management by the bank, there are at least two interested parties, as journalists were told by the head of VTB Andrei Kostin on the sidelines of VTB Capital’s “RUSSIA CALLING!" forum.

“We are holding it as security, registered in line with the law, and we see no legal grounds whatsoever but the arrangements of Lukoil and Otkritie to settle the issue, provided all our expenses are reimbursed to us. This is it, there is not going to be anything else. If this does not happen, we will foreclose the asset. We will look for a buyer for it, we will be selling it on specific conditions, and we have such interested parties. I will not call them by name, but they are ready. There are at least two persons, quite experienced in the area, well-known businessmen, who are ready to join in the process and take the asset”, — said Kostin.

On October 28 Reuters agency, quoting two sources, reported that the Bank of Russia was discussing with VTB and Otkritie Bank a possible reversal of the purchase by Otkritie Holding of AGD Diamonds asset from Lukoil, where the oil company would return the funds and take the diamond asset back. According to the agency, three main options were discussed: settlement between the parties, asset foreclosure by VTB, which had issued a foreign currency loan for AGD purchase, and reversal of the deal, where the buyer would repay the funds and take the company back.
If the deal is reversed, the seller, Lukoil, insists on repaying the funds at the USD exchange rate at the date of the deal, which was closed in December 2016, says a source. According to the Central Bank, the USD-RUB exchange rate has gone up by 17,3% since the date of the deal.

AGD Diamonds Dispute

In May 2020 FAMS filed a claim with the Arkhangelsk Region Court to invalidate the sale of 100% of JSC AGD Diamonds shares, owned by Lukoil up to 2017, to Otkritie Holding.

It was reported, that the agency found a violation of law by JSC Otkritie Holding and stated that “the applicant did not submit any information on several beneficiaries of JSC Otkritie having foreign nationality, which led to foreign investors gaining control of a Russian strategic company”. Later on Trust non-core asset bank (a major creditor of Otkritie Holding) reported that it estimated the deal at no more than $700 mn.

The sale of a major diamond mining company in Russia, JSC “Arkhangelskoye geologodobychnoye predpriyatie” (“Arkhangelskgeoldobycha”, AGD) to Otkritie Industrial Investments for $1,45 bn was closed three years ago on May 25, 2017. The deal was approved by the Governmental Commission for Control over Foreign Investment in the Russian Federation.