The reason is the Western sanctions
 Major Russian gold mining company “Petropavlovsk” plans to file for administration after sanctions against Gazprombank, its main creditor and sole buyer of the commodity.
Due to Western sanctions, the company is unable to pay its debts and became one of the first listed companies to face collapse due to the war in Ukraine, Reuters reported.
“Petropavlovsk” will request a hearing of the administrative appeal in the High Court in London in the coming days, the announcement, quoted by BTA, says.
After the news, shares of “Petropavlovsk” on the Moscow Stock Exchange collapsed by nearly 40% to a record price low. In London, the gold bullion company’s shares were suspended from trading at its request.
Petropavlovsk’s extensive commercial and financial relationship with Gazprombank made the mining company’s situation particularly challenging after Russia invaded Ukraine on February 24.
“Although Gazprombank in May allowed the mining company to sell its gold elsewhere, it appears that this decision came too little, too late,” Hargreaves Lansdown analyst Suzanne Streeter said in an email to Reuters.
In April 2022, Petropavlovsk said its main creditor Gazprombank had sent a notice demanding immediate repayment of about $201 million owed on a term loan from the Western sanctions-hit major Russian bank.
The invasion, which Moscow calls a “special military operation,” has led to Western sanctions that have made doing business in Russia more difficult. A number of Western companies have either left Russia or announced plans to do so, while others are facing difficulties servicing their debt due to Western sanctions.
In May, Google’s Russian subsidiary announced plans to file for bankruptcy after authorities seized the leading internet search engine’s bank account.
Meanwhile, Petropavlovsk is exploring the possibility of a sale and said it has received an offer from one party and an expression of interest from another party to buy its subsidiaries. However, the mining company did not name the interested parties.
Talks with both parties are continuing, Petropavlovsk said in a statement today, but it is “highly unlikely” there will be any return for shareholders if the sale goes through, given the heavy debt.
