Russia’s VTB moves to activate EUR 60mn state guarantees on Montenegro’s KAP loans – report

By bne IntelliNews July 2, 2013

State-controlled Russian lender VTB Bank has allegedly launched procedures to activate the EUR 60mn loan guarantees extended by the Montenegrin government to aluminium firm KAP, radio station AntenaM informed on July 2, quoting a report of daily Dan.

The state guarantees were extended at the end of 2009 to KAP’s owner – Russian firm CEAC controlled by Oleg Deripaska– and KAP was supposed to begin paying back the EUR 60mn loan to VTB in 2016 in three equal semiannual installments.

According to Dan’s report, based on unnamed sources, the government will delay the payment of this month salaries to the state administration and the public sector because of the guarantees activation.

VTB has already started seizing earlier this year EUR 2mn every month from KAP’s account at its Moscow-based branch, the report said. However, this activity was ceased after KAP entered into provisional insolvency in mid-June - the company stopped selling aluminium to its sole client Glencore, realising the proceedings from the sale will go to its account at VTB and be seized by the bank. As a result, metal worth nearly EUR 2mn has already been held on stock in the factory premises.

The government in Podgorica is now attempting to export the aluminium via state-owned Montenegro Bonus (which took over KAP’s electricity supplies until mid-July) – and thus gain access to the sales revenue on the account of Montenegro Bonus. The report, however, says the success of this plan depends on Glencore, which has signed a deal to purchase the complete annual output of KAP.

Back in 2009, the government agreed to provide KAP with state guarantees worth some EUR 135mn for three loans – at VTB, Deutsche Bank and Hungary’s OTP, and in return acquire half of CEAC’s holdings in the aluminium firm. As a result of the deal, the government and CEAC remained each with a 29.4% stake in KAP.

Last year the guarantees were already activated on the company’s loan with Deutsche Bank and the government had to urgently repay EUR 23.4mn, which resulted in a revision of the state budget. On the other hand, negotiations with OTP are currently underway on delaying the payment of a EUR 49mn loan. 

Related Articles

UNCITRAL dismisses all CEAC's claims against Montenegro in KAP case

The United Nations Commission on International Trade Law (UNCITRAL) arbitration tribunal dismissed all claims of CEAC Holding, owned by Russian businessman Oleg Deripaska, against ... more

Montenegro’s government adopts urgent budget revision

Montenegro’s government has adopted an urgent budget revision to redirect funds for social payments due in November and December, a statement on the government’s website said on November 8. ... more

Russian nationalists planned to kill Montenegrin PM Djukanovic, prosector claims

Russian nationalists organised the alleged coup attempt on the eve of Montenegro’s October 16 general election and planned to assassinate Prime Minister Milo Djukanovic, Montenegro’s special ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss