UPDATE: Sistema says defaults on debt due to asset seizure

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MOSCOW, Jul 17 (PRIME) -- Russian multi-industry holding Sistema has committed a technical defaulted on 3.9 billion rubles of loans as its assets were seized under a 170.6 billion ruble suit filed against the company by oil major Rosneft, the company said in a statement on Monday.

“The technical default took place due to the ongoing arrest of shares of MTS, Medsi and Bashkir Power Grid Company owned by the Corporation and Sistema-Invest, which was imposed by the Republic of Bashkortostan Arbitration Court as part of legal proceedings initiated by Rosneft, Bashneft and later joined by the Republic of Bashkortostan…against Sistema and Sistema-Invest seeking 170.6 billion rubles in damages allegedly incurred by Bashneft in connection with its reorganization,” it said.

“Sistema stresses that non-compliance with certain conditions of some of its credit facilities, which triggered the technical default, is driven exclusively by the arrest of the above-mentioned assets and is purely formal in nature. Sistema is servicing its credit and financial obligations in a timely manner and in full, and plans to continue doing so in the future.”

Rosneft filed its suit in May, seeking to recover a loss stemming from an alleged asset stripping at Bashneft in 2009–2014 by Sistema. In June, the Arbitration Court of the republic of Bashkortostan ordered to seize 185 billion rubles worth of assets of Sistema, including a 31.76% stake in mobile operator MTS, 100% in healthcare company Medsi, and 90.5% in Bashkir Power Grid Company, under the Rosneft case.

“Sistema believes that the arrest of its assets is unfounded, and continues to take all necessary steps to have the arrest lifted. To this end the corporation has filed an appeal with the 18th Arbitration Court of Appeal.” Sistema said in the statement.

Sistema representative Sergei Kopytov told PRIME that the company does not expect its creditors to demand an early redemption of liabilities as it is servicing and will continue to service its liabilities fully. The default connected to violation of a condition that says that seizure of some amount of assets triggers technical default.

“Starting from July 17, conditions on asset seizure will be violated for the sum of more than $25 million. We will not comment on deals, the sums of them are small,” he said.

(59.8806 rubles – U.S. $1)

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