Displaying items by tag: Sberbank

Russia: Eurocement has changed its name to Cemros. The rebranding exercise followed an internal staff competition to come up with a new name followed by a vote from a shortlist. The new name is intended to invoke the words ‘cement’ and ‘Russia.’ It was suggested by Evgeny Lukanovsky, Alexey Lotarev and Igor Efimov.

Eurocement was acquired by Smikom in 2021 for around US$2.2bn following an auction held by Sberbank.

Russia: Holdings company Smikom has won the auction to buy Eurocement from Sberbank. RBC News has reported the value of the deal as Euro2.1bn. Smikom, formerly known as BaselCement, will acquire a 100% share of Cyprus-based GFI Investments, which controls Eurocement Group. The final terms of the deal are still being agreed, according to sources quoted by the Russia-based media group. Neither Sberbank nor SmiKom have commented on the matter.

Sberbank acquired a 100% stake in GFI Investment in November 2020 following an increase in its debts in mid-2020. An electronic auction process for company then started in February 2021.

Eurocement is the largest cement producer in Russia operating 10 plants domestically and abroad.

Eurocement changed owners this week when Sberbank took control of the company’s parent organisation. Due to a ‘difficult financial situation’ the state-owned bank said it had consolidated 100% of the shares of Eurocement’s parent company GFI Investment Limited. It’s uncertain quite how difficult this situation is but in 2016 the cement producer owed the bank Euro700m. Local media agency RosBiznesConsulting (RBC) reported in September 2020 that the ‘problem borrower’ that had caused a record increase in overdue debt at Sberbank in July 2020 was none other than Eurocement. Whilst Sberbank has said so far that it does not have operational control of the group, it is seeking a strategic investor for the asset.

This is a major story given that Eurocement is Russia’s largest cement producer and it operates 19 cement plants Russia, Ukraine and Uzbekistan. It said it produced 16.5Mt of cement domestically in 2019 but this compares to a production capacity of around 50Mt/yr suggesting a considerably low utilisation rate of just one third! The producer has embarked on a modernisation programme in recent years but many of its plants are old and use wet-process production lines.

2019 finally saw the Russian cement market turn around following decline since 2015. Unfortunately, CM Pro reports that cement production in Russia as a whole fell by 5% year-on-year to 25.1Mt in the first half of 2020. Cement shipments fell by a similar rate. This trend appears to have carried on through July and August 2020. Cement consumption has fallen fairly uniformly in most regions with the exception of the Northwestern Federal District, which has seen a modest increase. In the middle of the year, Soyuzcement - the Union of Russian Cement Producers, was expecting wildly different scenarios ranging from falls of up to 10% in a negative situation to rebound of up to 3% in a positive one. It was pinning its hopes on government support for the construction industry in various ways. With the trend to August 2020, record breaking numbers of new coronavirus cases in early November 2020 and the onset of winter, it seems unlikely that Soyuzcement’s positive thinking will come to pass.

With this in mind who might want to buy into Eurocement? No doubt various private equity firms and local producers are watching the oil price carefully while they plan their next move. Internationally, LafargeHolcim seems the obvious western multinational contender with a presence in the country. Yet it seems unlikely it would want to take the risk, following its departure from certain regions like South-East Asia in recent years and persistent rumours about other divestment targets. HeidelbergCement’s balance sheet, credit lines and appetite for risk might not yet withstand a major investment in Russia. Buzzi Unicem has actually been expanding recently with an acquisition in Brazil but whether it’s prepared to bet on another market disrupted by coronavirus is unknown. China National Building Materials Group Corporation (CNBM) was reportedly planning on becoming a shareholder of Eurocement Group in 2016 but this may have just been bluster surrounding geopolitical links between Russia and China, and general cooperation between the companies on upgrading Eurocement’s old production lines. However, Russia is the next location in China’s Belt and Road initiative so it’s not ridiculous. Whoever steps up can expect the Russian government to take a keen interest, depending on how much control Sberbank wants to offer up of Eurocement. The story continues.

Russia: Sberbank has acquired a 100% stake in GFI Investment Limited, owner of Eurocement. RosBusinessConsulting News has reported that the acquisition followed an increase in GFI Investment Limited’s overdue debt to Sberbank in mid-2020. Sberbank in turn reported the largest increase in its overdue corporate loans in its history in July 2020. The bank says it does not have operational control of the group. However, it is reportedly “Looking for a strategic investor” for the asset.

Eurocement is the largest cement producer in Russia operating 10 plants domestically and abroad.

Russia: Filaret Galchev, the owner of Eurocement, expects that demand for cement in Russia will fall by 8% - 10% in 2016 after falling 12% in 2015. The cement producer will sell about 20Mt of cement in Russia and about 3.5Mt in other regions including Uzbekistan and Ukraine in 2016. He added that average production costs at the group will produce cement at around US$25/t.

In an interview with Rossiya 24 television reported upon by Interfax, Galchev also described Eurocement’s sale of its 6.1% stake in LafargeHolcim in February 2016 as ‘unexpected’. The Russian cement producer sold its share in LafargeHolcim after they lost nearly half of their value in six months.

"No, I did not expect it. We analysed the situation for a long time, but that is the decision that was made," said Galchev. He added that he had no issues with Sberbank, the Russian bank that restructured Eurocement’s debt after the sale of the shares in LafargeHolcim.

Originally Eurocement was a shareholder in Holcim and it received a stake in LafargeHolcim after that company was formed in a merger. The stake was subsequently transferred to Sberbank of Russia in January 2016 after the shares, which Galchev had acquired with financing from Bank of America, lost over 40% of their value in half a year. At the beginning of February 2016, Sberbank sold the 6.12% LafargeHolcim stake to investors from the UK, Switzerland, the US and other countries.

Russia: Eurocement and Sberbank CIB, Sberbank’s corporate and investment banking business have agreed on conditions for restructuring the company’s loan portfolio. The restructuring involves postponing the repayment of loans worth a total of US$592m and US$360m for up to six years, as well as optimising interest rates for the company’s loan portfolio at Sberbank.

“Sberbank CIB is a strategic partner of Eurocement. This agreement will help us cut debt servicing costs and minimise the influence of negative macroeconomic factors on our company,” commented Mikhail Skorokhod, President of Eurocement. The conditions for restructuring the debt portfolio will enable Eurocement to take a more flexible approach to financing its operational activities and help it achieve strategic goals.

Russia: Sberbank has sold a 6.12% block of shares in LafargeHolcim Limited it received under a repo deal with Eurocement. The shares have been sold to a group of investors from the UK, Switzerland, the US and other countries. Sberbank's stake, amounting to 37,172,910 votes, was worth roughly Euro1.5bn based on LafargeHolcim share quotations on the Zurich exchange. Sberbank CIB said in a press release previously that the deal was organised to provide financing for Eurocement Holding.

Russia: Sberbank CIB, the investment banking arm of Russian lender Sberbank, has announced that it holds 6% of LafargeHolcim following a repurchase deal with Eurocement. Under the terms of the agreement, Sberbank CIB had organised financing for Eurocement Holding AG in return for 37m shares in LafargeHolcim. Eurocement has the right to buy back the shares at a specific price and on a certain date.

The agreement was implemented on 21 January 2016. No further details were disclosed. Before the repurchase deal Eurocement was among the largest shareholders of LafargeHolcim.

Russia: Eurocement Group has asked the country's biggest bank Sberbank for a US$634m of project financing, according to company President Mikhail Skorokhod. "We expect that in the last 10 days of June 2015, we will be able to receive approval on this request from an interdepartmental commission," he said.

Sberbank has already approved US$248m from the total request, which will be spent on construction of its 10,000t/day (~4Mt/yr) Mikhailovsky plant in the Ryazan Region.

Eurocement also plans to attract US$300m of financing from Industrial and Commercial Bank of China and Bank of China to upgrade its plants. The request has been submitted to China's Sinosure, and is currently being reviewed.

Russia: Sberbank and Eurocement signed a cooperation agreement at the XVIII St Petersburg International Economic Forum to secure funding for expansion by the Russian cement producer. Herman Gref, the bank's CEO and Chairman of the Board, signed the agreement for Sberbank and Filaret Galchev, the Chairman of the Board of Directors, signed for Eurocement, according to SKRIN Newswire.

The agreement also stipulates that the two parties will cooperate on a whole range of issues, from settlement and cash services to the provision of investment and banking products (via Sberbank CIB1) and other financial services, both for Eurocement group itself and for its affiliates and dependent companies.

"The signing of the agreement with Sberbank will serve as a guarantee that the Holding company's investment programme will receive sufficient funding until 2018 and that the transition to the active phase of the construction of new cement manufacturing facilities will be made. The implementation of this project will give a significant boost to growth in Russia's construction sector as a whole, by providing high-quality cement for infrastructural and residential projects in the country," said Filaret Galchev, the Chairman of the Board of Directors at Eurocement.