Russia

Russia's No. 1 telecoms operator MTS said on Wednesday its Uzbek subsidiary had applied for bankruptcy, Reuters reported. The phone operator had been fighting to restore its Uzbek business after a court revoked its license to operate in August as part of dispute involving a criminal case against local MTS managers and a back-tax claim. MTS was ordered to pay $600 million in fines by an Uzbek court in November.

Russian billionaire Oleg Deripaska’s Kuban Airlines, the country’s 14th biggest, declared bankruptcy and ceased flying today after running up debt and breaching federal regulations, Bloomberg reported. “The main reasons for stopping the airline’s operations are the difficult financial situation and failure to comply with a number of provisions mandated by new federal aviation rules,” Krasnodar-based Kuban Airlines said in a statement on its website. The carrier filed for bankruptcy at the Krasnodar Region Arbitration Court.

OAO Mechel, Russia’s largest producer of steel-making coal, got a year’s breathing space on repayments to a $1 billion loan by signing a restructuring deal with banks, Bloomberg reported. The company, which reported an $823 million loss for the second quarter of the year because of falling coal prices, got banks to agree to an amendment and restatement of the syndicated loan, it said in a statement distributed by Globe Newswire. The facility, maturing in 2015, would have repaid $600 million next year in monthly installments and these will be delayed for 12 months, it said.

Russia’s regional governments have no chance of defaulting on their debt even as they increase their borrowing levels, Finance Minister Anton Siluanov said, Bloomberg reported. “Investors often ask about the possibility of default in the regions -- there can simply be no such thing,” Siluanov said at a conference organized by VTB Capital in Moscow today. “That’s ruled out. Perhaps 15 years ago there was tension of this kind, but now it’s impossible.” Russian regions will increase borrowings this year, he said in another speech at the Federation Council, the upper house of parliament.

Switzerland-based trader Gunvor said on Monday that operations had resumed at its German Ingolstadt refinery, acquired from insolvent refiner Petroplus earlier this year, Reuters reported. Gunvor, which is co-owned by a Russian tycoon and chief executive Torbjorn Tornqvist, bought the 100,000 barrels per day plant in May from the insolvent Petroplus to build on its presence in Europe. "We intend to build upon the good and enduring customer relationships, and enlarge our trading activities in Germany and the Alpine region," said Tornqvist in an emailed statement.

Bondholders are demanding higher yield premiums from OAO Mechel relative to other Russian metals and mining companies on concern its debt load will soar with the takeover of a smaller steel producer, Bloomberg Businessweek reported. Billionaire Igor Zyuzin’s coal company, which agreed on new covenants under its international debt less than four months ago, will seize control of the indebted Estar Group if the Moscow-based company can’t repay a $945 million bank loan guaranteed by Mechel’s units by the end of September, according to the debt agreement.

Russia's arbitration court ruled on Thursday that state-owned crude oil producer Rosneft was not obliged to repay almost $340 million of loans taken by a unit of Yukos which it acquired after Yukos was forced into bankruptcy by authorities. Once Russia's top crude producer, Yukos declared bankruptcy in 2006 after a multi-billion-dollar back-tax claim from the state. Former Yukos owner and chief executive officer Mikhail Khodorkovsky is serving a prison sentence on fraud and tax evasion convictions. He is due to be released in 2016.

Indebted Russian coking coal and steel producer Mechel faces the risk of a further increase in already-stretched borrowings due to the financial struggles of subsidiary Estar, which owes it nearly $1 billion, Reuters reported. If Estar defaults on the loan - which falls due at the end of September - some analysts believe it could lead to renewed pressure on Mechel's debt covenants, less than six months after they were renegotiated for the second time in as many years. "If the loan is not repaid we will enforce the security, which is the pledge of shares of essentially all Estar assets ...

Russia is setting aside up to $40bn for this year and next to shore up the economy in case the crisis in the eurozone escalates and spreads, and is dusting off a plan that would allow the government to recapitalise the country’s banking system, the Financial Times reported. In his first interview with a foreign newspaper since his appointment as finance minister last year, Anton Siluanov said the government had agreed to create a reserve mechanism worth Rbs500bn ($15.4bn) for next year “for the direct financing of anti-crisis measures”.

Swiss steel and coal trader Carbofer General Trading (CGT) was declared bankrupt last month, officials in its home town Lugano said on Friday, shortly after its shipping branch Carbofer Maritime, Reuters reported. CGT, once a large player in the spot coal and steel trade, was declared bankrupt on May 16, the bankruptcy office of Lugano told Reuters, as market conditions worsened and financing froze up. Its Copenhagen-based shipping branch Carbofer Maritime Trading (CMT) was declared bankrupt about a month earlier, the Danish Sea and Maritime court said.