RBS and Bank of America have said they won't participate in a $1 billion syndicated loan to the Russian gas processing and petrochemicals company Sibur, as tensions around Ukraine escalate.
"As the situation around Ukraine has deteriorated, banks demanded higher profitability, but the company disagreed on it," Vedomosti quotes the PRIME news agency.
The five year loan was discussed in February with RBS and BofA, along with Unicredit, Sumitomo, Citibank, ING Bank, says Vedomosti. The funds were to be spent on “enterprise objectives” and debt refinancing, which stands at $26 million.
The Russian chemicals group is searching for both Russian and foreign banks to cover its financial needs, with Sberbank the only chosen domestic lender so far.
RBS and BofA don’t want any additional loses if sanctions are imposed on the borrower, the paper said.
It’s too early to say that the deal has collapsed, but “we can confidently say that the circle of potential loaners has narrowed,” one of the bankers told Vedomosti.
Banks are conducting negotiations with Sibur on the potential impact of sanctions on the owners of the company as well as on industry representatives or deal participants.
The Ukrainian factor is the most influential both in the debt and in the M&A markets says the chief analyst of Nordea Bank Denis Davydov. He suggests foreign companies will delay possible transactions until the May Presidential election in Ukraine.
Sibur is not the only company that have suffered from the Ukrainian conflict and sanctions from the US and EU. Obuv Rossii has postponed an IPO this year to an unknown date, waiting for better times. The Russian branch of Metro Cash and Carry, and the Detsy Mir toy stores have delayed plans to go public until more favorable market conditions.