Russia suspends duty-free imports of Interpipe's pipes

Astrum

Since April 1, the Federal Customs Service of the Russian Federation started levying duties on imported pipes of Interpipe due to the lack of agreement on the size of 2Q10 quota for dutyfree imports. The final decision on the quota prolongation and its size should be approved on April 15.

In the case that there is no positive decision on the prolongation of the duty-free import of Interpipe’s pipes to Russia, the Group’s sales should go down significantly.

In 2009, Russian pipe market accounted for up to 40% of the Group’s sales, while Interpipe controlled Nyzhnyodniprovsk Pipe (NITR: U/R) and Novomoskovsk Pipe (NVTR: BUY) sold to Russia 46% and 26% of their pipes.

Interpipe fails to pay on Eurobond coupons

UR has written earlier about Interpipe's problems with its creditors. On February 5 Interpipe's Eurobond owners were waiting for the coupon payment, which have never materialized. The tranche on July 2007 $200 mln Eurobond issue should have amounted to $8.75 mln. Now the repayment of Eurobonds themselves, which is planned for August 2, 2010, is under threat.

It is rumored that most of the Eurobond issue belongs to Interpipe now and that non-payment of the tranche is a method of pressuring other Eurobond owners to agree for debt restructuring, once Interpipe offers it.

Fitch downgrades Interpipe rating to Restricted Default

Fitch downgraded Interpipe Limited long-term default rating to ‘RD’ on Dec 18. Lowered ratings of the company are due to lack of understanding between the company and creditors as well as with Eurobond holders ($200 millions outstanding).

Fitch sees a considerable risk that Interpipe can default on paying back the loans once the period of extension agreed with the creditors runs out. Further postponement of payments should be agreed upon in January 2010 and Fitch expects these negotiations to be difficult.

Overall Interpipe owes $900 million at the end of the III quarter 2009. In September it was announced that Interpipe will seek additional financing from Barclays Capital and Citigroup Inc., which arranged the loan for the company in May 2008.

Earlier this year it was reported that Ukrainian billionaire Viktor Pinchuk wants to sell shares of Interpipe Ltd. in an IPO by the end of 2011.