Russian billionaire ups Irish loan to $650m
Funding to build a new terminal was arranged by Dublin company, writes Fearghal O’Connor
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 The charges have since been withdrawn and one billion roubles worth of the airport’s assets have been unfrozen.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.