Severnaya Verf Shipyard Faces Auction

07.08.2012 Majority stake of Severnaya Verf shipyard (St. Petersburg) will be put on auction today, Aug 7, reports online magazine Fontanka.Ru. Earlier pledged securities of the company will be realized via agents of Rosimuschestvo. Most likely, the auction would be won by JSC United Shipbuilding Corporation which purchased Baltiysky Zavod shipyard in July 2012.

Totally, it is planned to tender 112 000 shares of Severnaya Verf which is 75.82 % of the shipyard's authorized capital. This package was initially evaluated as RUR 14.5 bln, but now the starting price is about RUR 13 bln.

As is expected, state-led United Shipbuilding Corporation (USC) is the prime contender for shares of Severnaya Verf. At analogous auction in July, USC purchased 88% shares of Baltiysky Zavod for RUR 224.3 mln.

In May 2012, USC obtained permission of Federal Antimonopoly Service to purchase majority stake of Severnaya Verf. If so, the state corporation would consolidate 96.7% shares of the shipbuilding company. USC is to attend the auction through its affiliate, JSC Western Shipbuilding Center (WSC).

Due to the fact that Western Shipbuilding Center has not obtained a credit required for tendering yet, the first auction may be aborted. WSC could take part in the second tender.

Because of some production means and industrial networks like water supply and sewerage are in ownership of ex-shareholders – United Industrial Corporation (UIC) owned by former senator Sergei Pugachev – USC insisted on considerable reduction of the lot's starting price. The corporation wanted to purchase all assets of UIC (Severnaya Verf, Baltiysky Zavod, and Iceberg Central Design Bureau) for RUR 23 bln instead of RUR 89 bln.

In fact, USC took Severnaya Verf under control even in the fall of 2011. Holding shares of the shipyard in pawn for credit, Central Bank of the Russian Federation placed the yard into trust of USC.

Assets of United Industrial Corporation in St. Petersburg – Severnaya Verf, Baltiysky Zavod, and Iceberg Central Design Bureau – were distrained when the Central Bank on Oct 5, 2010 revoked license from MezhPromBank which also belonged to Sergei Pugachev. Moscow Arbitrazh Court on Nov 30, 2010 declared MezhPromBank bankrupt. It owes RUR bln to creditors, including RUR 32 bln to the Central Bank.

Being questioned by Central Navy Portal, one of executives of Severnaya Verf shipyard confirmed the information about the auction. "Now we're under control of USC, the corporation deals with this matter. We're in subordinate situation. Our lawyers will be informed on results of the auction, but this process may take some time", said the interviewee.

JSC Severnaya Verf is one of Russia's leading shipyards. It builds 1-st and 2-nd rank warships in series, as well as commercial vessels. Principal client is Russian Defense Ministry; the shipyard also repairs foreign naval ships. The last big contract (RUR 11.7 bln) for three supply vessels was signed with defense ministry late June 2012.