Rus­sian bil­lion­aire ups Ir­ish loan to $650m

Fund­ing to build a new ter­mi­nal was ar­ranged by Dublin com­pany, writes Fearghal O’con­nor

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

A RUS­SIAN bil­lion­aire who owns Moscow’s Do­mode­dovo Air­port has al­most dou­bled to $650m a loan ar­ranged for him by a low-key Dublin corporate ser­vices firm, new fil­ings at the com­pa­nies of­fice show.

Dmitry Vladimirovich Ka­men­shchik is us­ing the money for the de­vel­op­ment of a new ter­mi­nal and a sec­ond run­way at the Rus­sian air­port un­der its new 2026 mas­ter­plan that would see pas­sen­ger traf­fic rise to 55 mil­lion. An ini­tial $300m loan was fa­cil­i­tated by Cafico In­ter­na­tional, a corporate ser­vices firm based on Dublin’s Fe­nian Street, which spe­cialises in struc­tured finance.

Do­mode­dovo, the sec­ond busiest air­port in Rus­sia, han­dles more than 30 mil­lion pas­sen­gers a year and is pri­vately owned by Ka­men­shchik, who is said to be worth more than €2bn. He has long re­sisted a bid by the Rus­sian state to buy a stake in the air­port.

Last year, Ka­men­shchik found him­self at the cen­tre of con­tro­versy when he was placed un­der house ar­rest in con­nec­tion with a 2011 sui­cide bomb­ing at the air­port, which killed 37 peo­ple. The au­thor­i­ties al­leged that the air­port had not car­ried out suf­fi­cient se­cu­rity checks at the time. The charges have since been with­drawn and one bil­lion rou­bles worth of the air­port’s as­sets have been un­frozen.

The loan is struc­tured as a spe­cial-pur­pose ve­hi­cle, a form of debt se­cu­ri­ti­sa­tion that is pro­vided for un­der Sec­tion 110 of the Ir­ish Taxes Con­sol­i­da­tion Act. It al­lows for the re­fi­nanc­ing and repack­ag­ing of corporate debt and Ire­land has be­come a world leader in such trans­ac­tions.

The loan for the Rus­sian air­port ter­mi­nal was routed to a Cypriot-reg­is­tered com­pany via an Ir­ish-reg­is­tered com­pany called DME Air­port Des­ig­nated Ac­tiv­ity Com­pany. In 2013 DME is­sued $300m in loan notes at a 6pc in­ter­est rate, due in 2018, and these notes are listed on the Ir­ish Stock Ex­change.

Ac­counts just filed with the CRO by DME for 2016 show that DME is­sued a new $350m loan in Novem­ber at 5.875pc and which is due for re­pay­ment in 2021. The over­all prin­ci­pal bal­ance out­stand­ing at the end of De­cem­ber 2016 was $571m, fol­low­ing the re­pay­ment of more than $84m of the orig­i­nal loan .

The ad­min­is­tra­tive ex­pense for the loan was listed as just over $100,000 for 2015 and 2016, while DME paid $836 cor­po­ra­tion tax in Ire­land for the two years.

The ac­counts con­tain a warn­ing that be­cause Ka­men­shchik’s op­er­a­tions are pri­mar­ily based in the Rus­sian Fed­er­a­tion that it is “ex­posed to the eco­nomic and fi­nan­cial con­di­tions of the Rus­sian Fed­er­a­tion”.

“In 2014, cer­tain sec­toral sanc­tions against Rus­sia were im­posed by sev­eral coun­tries,” said the ac­counts. “The sanc­tions con­tinue to be in ef­fect in 2016. While the com­pany is not di­rectly sub­jected to sanc­tions, the sanc­tions along with the volatil­ity in crude oil prices and a sig­nif­i­cant de­val­u­a­tion of the Rus­sian Rou­ble con­tinue to have ad­verse ef­fect on the Rus­sian econ­omy.”

The di­rec­tors of DME, two of whom are based in Dublin and one in Cyprus, and who have no ben­e­fi­cial in­ter­est in the com­pany, be­lieve that “the bor­rower is tak­ing ap­pro­pri­ate mea­sures to sup­port the sus­tain­abil­ity of its op­er­a­tions un­der the cur­rent cir­cum­stances” but warned that “un­ex­pected fur­ther de­te­ri­o­ra­tion” to the sit­u­a­tion in Rus­sia could “neg­a­tively af­fect the bor­rower’s re­sults and fi­nan­cial po­si­tion in a man­ner not cur­rently de­ter­minable”.

The di­rec­tors also said that they do not “at present” an­tic­i­pate any fur­ther ex­ten­sion to the loan. When con­tacted a spokesman for Cafico de­clined to com­ment.

A prospec­tus for the loan is­sue con­tained 50 pages of risks as­so­ci­ated with the air­port op­er­a­tion but said that “none of the pro­ceeds of the is­sue of the notes will be used to fund ac­tiv­i­ties or per­sons that are sub­ject to sanc­tions in­tro­duced by the US and the EU.”

The risks cited in­cluded every­thing from nor­mal busi­ness and com­pet­i­tive risks to pos­si­bil­ity of ter­ror­ism and the es­ca­la­tion of the Ukraine con­flict.

Dmitry Vladimirovich Ka­men­shchik

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