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Deal 5: Norilsk Nickel's Andrey Gavrikov on USD 500 Million Eurobond Offering

Deal 5: Norilsk Nickel's Andrey Gavrikov on USD 500 Million Eurobond Offering

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On September 15, 2020, CEE Legal Matters reported that Debevoise & Plimpton had advised Norilsk Nickel on its USD 500 million Eurobond offering due 2025. CEEIHM spoke with Andrey Gavrikov, Head of Direction for Legal Support of Treasury Operations at MMC Norilsk Nickel, to learn more about the issuance.

CEEIHM: Please share a few words about Norilsk Nickel and its operations in Russia for our readers. 

Andrey: Nornickel is Russia’s leading metals and mining company, the number one manufacturer of palladium and refined nickel, and one of the biggest platinum and copper producers. The group also produces cobalt, rhodium, silver, gold, iridium, ruthenium, selenium, tellurium, and sulfur. The products are supplied to over 30 countries. In addition to its production facilities, the company has its own sales network, fuel and energy companies, transport assets, a body of R&D units, and a unique Arctic cargo fleet. The company’s securities are among the most liquid instruments in domestic and foreign equity markets. In Russia, the shares of MMC Norilsk Nickel are on the First Level quotation list of the Moscow Exchange and admitted to trading at the Saint-Petersburg Exchange. Its ADRs are traded on the US OTC market and in the electronic trading system of OTC markets at the London, Berlin, and Frankfurt stock exchanges. The company’s ADRs are also included in the FTSE Russia IOB Index of the London Stock Exchange.

CEEIHM: What is the capital raised through this Eurobond intended for?

Andrey: The company traditionally uses the capital from Eurobonds for general corporate purposes, including capital investments and the refinancing of its debt portfolio. The current issue has become a record for Russia and CIS – the transaction resulted in the lowest coupon ever achieved by a corporate or sovereign issuer out of Russia and CIS for any USD-denominated Eurobond public placement – which gives us a degree of flexibility for the further use of the funds we received. 

CEEIHM: CEE Legal Matters reported on several similar issuances over the years. How would you say your in-house systems have improved over the years to deal with this type of recurring work? 

Andrey: The Nornickel group employs about 80,000 people in total. At the same time, the group's business is quite diverse – we have our own aircraft fleet, helicopters, Arctic icebreaking fleet, and various social and infrastructure facilities, all in addition to our production line. The assets are located in regions from Australia to the United States, from Africa to the Arctic circle. These all make the task of conducting due diligence, collecting the necessary information, and sifting out unnecessary data quite challenging. The Eurobond Prospectus preparation is always about working with people and with a large amount of data. Despite this difficult task, we have learned to enter the bond market within a very tight timeframe. The average period of preparation for release takes one month from the moment of a decision to initiate the process until its public placement. In fact, that one month is the minimum possible time under the market procedures. The current release was a record not only for the result achieved but also for the conditions under which the release was made. I am referring here to the COVID-19 outbreak, remote working of employees, and the general world situation. Behind the successful placement lies the professionalism of the team and, definitely, the well-coordinated interaction of the whole team involved. 

CEEIHM: What would you point to as the most complex aspect of the offering from a legal standpoint? 

Andrey: The most complex aspects relate mainly to the work within the organization; management and coordination and in some part educational work with production, technical ecological, and other departments and the interaction with local business units. Imagine that within a couple of weeks you need to turn an 80,000-employee organization upside-down with investigations and detection of all the necessary information and then translate that into legal language for the placement. Documentation for the placement is also an important part of the process, but in our case, it has already been worked out for years in the framework of previous issues, plus additional assistance is provided by the banks involved in the issue and by legal consultants (both from our side and the banks' side). 

CEEIHM: Debevoise previously advised Norilsk Nickel on a number of similar finance and capital market matters, including on six previous Eurobond offerings totaling USD 5 billion. How was that relationship initiated and why do you continue to turn to the firm for legal assistance on these kinds of matters?

Andrey: The fundamental principle is the high quality of work and professionalism. However, this is not all. There are a number of top-level law firms in Moscow and we can say that a high level of professionalism is the must for them to be engaged in any Nornickel business. For Debevoise the key order winners are basically two: (1) a deep understanding of the company's business model and market situation; (2) the firm provides more than just legal support, it helps in developing a general strategy of the whole process, provides a “business view” and has a common transaction-oriented approach, rather than purely a “legislative" one. All these together allow the whole team to achieve high results in our activities.

Originally reported by CEE In-House Matters.

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