VTB to Acquire 25% of TransContainer Stakes from Billionaire Magomedov

This week, VTB Bank may receive a stake in TransContainer, Russia’s largest freight transport company, owned by FESCO (25.07%), two sources close to FESCO and TransContainer shareholders have told Vedomosti. The bank will receive the package for debts and then VTB will sell it to its strategic partner, the sources said.

“It is structurally correct, but I have no idea how much time it will get,” one of them said.

FESCO’s chairman of the board of directors Leyla Mammedzade, who manages the assets of businessman Ziyavudin Magomedov (who owns 32.5% FESCO), said that the company is now in the final stage of negotiations on the sale of its stake in TransContainer. She did not tell the name of the buyer but noted that proceeds from the transaction would be spent to repay FESCO’s debts.

“I very much hope that by the end of 2018, the company’s debt/EBITDA ratio will decrease to the values we promised the banks [below four EBITDA],” she said.

FESCO’s package in Transcontainer was deposited to VTB under the repo transaction from December 2014. In addition, at the end of 2017, VTB opened a $680-million credit line for the company, most of these funds were spent to pay Eurobonds ($551.7 million) to holders of the company. However, in February 2018, the company had a technical default on ruble bonds by failing to fulfill its securities obligations by 6.375 billion rubles ($97.4 million).

Magomedov, who owns Summa Group, was charged with embezzlement in April this year. The move hit FESCO hardest, with its shares plunging 19.18 percent after Russian authorities arrested Magomedov and his brother on charges of embezzling more than $35 million. It was one of the highest-profile prosecutions of a Russian tycoon in years.

Summa Group and U.S. private equity fund TPG own 49.9 percent of Fesco shares.