Viktor Pinchuk
Interpipe Holdings Plc.'s desire to issue $300 million in five-year bonds on international capital markets could be considered good news. But for one thing: it's another blow to Ukraine's investment image. Either Pinchuk won't be able to issue his entire "lottery ticket" or he'll manage to sell them and screw foreign investors again, writes Ukrrudprom.
Interpipe has a remarkable investment history. Victor Pinchuk's brainchild, built using the resources of Soviet pipe-rolling plants, first borrowed money from the West in 2007. Despite the rather modest sum of $200 million, Viktor Mikhailovich stopped servicing the debt a year later, and in 2010, he signed a restructuring agreement with his creditors.
In 2013, Pinchuk again defrauded his creditors by ceasing to service Interpipe's debts. As a result, two years ago, Viktor Mykhailovich proposed a restructuring plan for both bond and loan debts totaling $1,25 billion. The debtor proposed converting them into six-year Eurobonds worth $310 million, as well as two loan tranches: $45 million to Ukrainian banks and $45 million to international banks. The remaining debt, $850 million, was proposed to be written off.
While negotiations with creditors were ongoing in London, Interpipe's press service issued a statement that essentially openly admitted that a significant portion of investors' funds had been stolen. In its official statement, the company claimed to have invested only $1 billion in production capacity over the past 10 years: "We built the Interpipe Steel metallurgical plant from scratch, costing $700 million. Approximately $300 million was invested in modernizing pipe and railway product production."
And while the electric steelmaking complex was built partly with borrowed funds (including from the Italian export credit agency SACE) and partly with its own funds, “all investments made since the launch of Interpipe Steel, that is, approximately $300 million in the production of pipes and railway products, were made with its own funds,” the company claims.
In light of this super-commentary, creditors naturally asked the question: where exactly did Interpipe use the lion's share of the $1,25 billion borrowed over the decade?
Clearly, the money from Interpipe's creditors is the very source of Viktor Mikhailovich's strength, enabling him to sustain for years a trio of unprofitable television channels (ICTV, Novy, and STB), a perpetually unprofitable bank (Credit-Dnepr), and its star-studded supervisory board (which only choked Pinchuk last year), spend tens of millions of dollars on the works of Jeff Koons and Damien Hirst (like the famous sharks and sheep in formaldehyde), and simultaneously buy up world politicians of the caliber of Clinton and Trump for his Yalta European Strategy. In short, he lives in luxury. After all, all of this has already been paid for by his gullible and foolish creditors.
Now they're being offered another $300 million loan, of which, judging by Interpipe's experience with previous bond issues, Viktor Mikhailovich is unlikely to repay even half. Following the 2019 restructuring, creditors barely received 42% of their debt.
In addition to Pinchuk's inherent inability to repay his debts as the main beneficiary of the pipe and wheel holding company, Interpipe's corporate problems are currently playing against it. These range from accusations of dumping in the American market to periodic problems accessing the Russian market. As a result, Interpipe ended 2020 with revenues a quarter lower than in 2019.
However, it's possible that Pinchuk will still find the necessary number of Western investment idiots eager to hear stories about the "prospects" of the Ukrainian pipe and wheel holding company. After all, he somehow managed to borrow over a billion dollars after the 2010 restructuring.
FILE: Viktor Pinchuk: Ukraine's richest son-in-law
In topic: Who sold Motor Sich?
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