Sovcomflot sold tankers to Asia and the Middle East to pay off debts

Sovcomflot is one of the world’s largest tanker fleet operators. In the spring of 2022, the company was forced to get rid of the ships in order to pay off its debts. Eastern Pacific paid $700 million to the bank that took over the ships, sources told the WSJ.

In addition, Sovcomflot is negotiating with companies, including the China Merchants Group, to sell other tankers, the sources said. According to them, some of the transactions are likely to go through shell companies. The publication notes that some of the ships sold have changed names and are registered under different flags in order to be insured.

The situation is complicated by the fact that European companies, according to the terms of the sanctions, are obliged to stop cooperation with Russia on May 15. Until then, Western banks can receive money from Russian firms to repay loans.

In total, Sovcomflot has 122 vessels, including oil tankers, gas carriers and icebreakers. The company said that for sale are “obsolete objects, as well as ships, the use of which was impossible due to restrictions imposed on the Russian merchant fleet.”

Sovcomflot has extensive experience in transporting crude oil and natural gas for major oil companies. In addition, the operator has ordered more than 30 vessels that will deliver liquefied natural gas from projects in the Arctic. Now Sovcomflot, according to the WSJ, is trying to register in Dubai. According to experts, this will allow him to avoid punishment for sanctions for some time.

  • After the start of a special operation in Ukraine against Sovcomflot, sanctions were imposed by the UK, the EU and Australia. In addition, the US has banned companies from raising US capital through the issuance of debt or shares. On April 25, Sovcomflot warned that due to Western restrictions, it would not be able to transfer the coupon payment on Eurobonds maturing in 2028 on time.

  • British edition of Lloyd’s List citing sources May 5 reportedthat Sovcomflot will have to sell about a third of the fleet in order to pay off creditors. The company then called these reports “exaggerated.”

  • According to Sovcomflot, the company’s total debt obligations at the end of 2021 amounted to approximately $2.4 billion. Its profit in 2021 fell from $267.1 (in 2020) to $35.8 million.

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