IEC CJSC intends to pledge its shares and property in HSBC Armenia  and Eurasian Development Bank

ArmInfo. International Energy Corporation (IEC) CJSC, which operates the Sevan-Hrazdan cascade of hydroelectric power stations in Armenia, intends to pledge  its shares and property in HSBC and / or in the Eurasian Development  Bank. The opportunity to pledge shares and property of the company  will be the subject of discussion at the RA Public Services  Regulatory Commission (PSRC) on February 19.

According to the PSRC, it is planned that 90% of the ordinary shares  of CJSC - 527085 at a nominal price of 1,000 drams for each, as well  as the property of the company, will be secured. Earlier, PSRC  appealed to the Prime Minister's office in order to clarify the  position of the RA government. Due to the fact that there are no  objections from the Ministry of Territorial Administration and  Infrastructure, the Ministry of Economy, the National Security  Service and the Security Council, the Public Services Regulatory  Commission intends to satisfy the company's request. Moreover, the  deal will not affect the security of the energy complex of Armenia,  the interests of domestic consumers, and the country's national  security. The term for concluding an agreement on a transaction shall  not exceed six months from the date of entry into force of this  decision by the PSRC. The company undertakes to submit copies of the  necessary documents to the Commission within three weeks.

The PSRC report does not indicate the reasons for the collateral,  however, according to information available to ArmInfo, the Tashir  Group of Companies intends to attract credit resources from HSBC  Armenia and the Eurasian Development Bank to repay IEC debts, which  will enable the Group to fully acquire the rights of the owner of  IEC.

Recall that on December 5, JSC Hydroinvest is a 100% subsidiary of  RusHydro  concluded an agreement with the Hrazdan Energy Company OJSC  (RazTES), which is part of the Tashir group, on the sale of the  package of CJSC International Energy Corporation. RusHydro owned 90%  of the shares of IEC. Earlier, RusHydro announced that it had  terminated its participation in IEC The conclusion of the contract of  sale was approved by the board of directors of the company. The  permit for the transaction was issued by the Public Services  Regulatory Commission of the Republic of Armenia. In accordance with  the agreements of the parties, the cost of 527,085 ordinary  registered uncertified shares of IEC amounted to 172.96 million  rubles. Under the terms of the agreement, the buyer will fully repay  IEC's loan obligations to the European Bank for Reconstruction and  Development and the Asian Development Bank, after which the shares of  the owner of the Sevan-Hrazdan cascade of hydroelectric power  stations will be transferred to the buyer's property, and guarantees  for these loans and consolidated debts will be withdrawn from  RusHydro group will decrease by $ 55 million.

The proposal from RazTES was received in July 2019. E&Y valued 90% of  IEC at 140 million rubles, but the asset was sold at a book value of  172.97 million rubles. RusHydro bought the hydroelectric power  station from Inter RAO in 2011 for 172.9 million rubles, the same one  received them when the RAO UES of Russia was split. RusHydro  announced its intention to sell the asset as a non-core asset back in  2017 due to the large debt burden, which cannot be reduced due to low  tariffs. If the IEC violates covenants or debt payment schedules,  this could lead to a cross-default on RusHydro's obligations - to  avoid this, the company would have to inject additional funds into  the IEC. "IEC" CJSC is one of the largest electricity producers in  the territory of Armenia. The installed capacity of the company's  hydropower plants is 561.4 MW, or about 14% of the total installed  capacity of power plants in the Republic. The company owns a seven  hydroelectric power plants that generate 8-10% of the country's  electricity. The hydropower cascade uses the natural runoff of the  Hrazdan River and irrigation water releases from Lake Sevan.