RIYADH: Severstal PJSC, a Russian company mainly operating in the steel and mining industry, has become the first firm to run out of time to pay interest on foreign currency debt since the war in Ukraine began after Citigroup blocked the transaction.
The company is also now at risk of asking creditors to default, Bloomberg reported.
Despite an established cash flow, the company was unable to settle a $12.6 million bond coupon during the five-business-day grace period that expired Wednesday.
Severstal said it was eager to repay, but Citigroup, as the correspondent bank for the unit that issued the debt, is blocking repayment, according to Bloomberg.
A person familiar with the matter said Citigroup had asked the company to obtain permission from the US Office of Foreign Assets Control before it could transfer the funds.
The US does not impose any sanctions on the company or the controlling shareholder.
“This is an extraordinary situation for us,” the CEO Alexander Shevelev said in an emailed statement.
“We continue consultations with partners and do our best to ensure that bondholders receive funds in accordance with the terms of the bond issue. I hope that this injustice will be resolved soon and the rights of bondholders will be respected.”
Two bondholders also confirmed Thursday that they had not been paid, according to Bloomberg.