TMP on the brink of bankruptcy; offshore companies left the project

On June 22 of this year, the Supreme Court of the Republic of Uzbekistan heard a court case regarding the establishment of the Tashkent metallurgical plant.

The founder of the plant with a 49.9% share – the Reconstruction and Development Fund of Uzbekistan – filed a lawsuit against the other two founders of the enterprise - Cypriot Metalloinvest Holding (41.87%) and Miramonte Investments (8.23%) offshore companies.

TMP was registered as an LLC on January 26, 2017. Later, a new version of the company's charter is approved and it is reorganized as a joint venture.

Gazeta.uz draws attention to the fact that the Reconstruction and Development Fund, which sued the company, has financial difficulties today, the net loss at the end of 2022 is 316.8 billion soums, and the accumulated loss in 2017-2022 is 916.92 billion soums (about $79.5 million) and emphasizes the need to take urgent measures to improve the company’s financial situation. In particular, the founders of the joint venture had to approve the business plan for 2023, extend the terms of repayment of previously involved, overdue loans.

It was also said that additional funds should be attracted from the Russian company “International Financial Technologies XXI”, which specializes in providing loans and other types of loans, with a charter capital of 10,000 rubles (about $111). It is intended to attract 1.5 billion rubles ($16.7 million) from this company for a period of 24 months with an interest rate equal to the main rate of the Central Bank of Russia (7.5%).

At the same time, in accordance with the terms of the syndicated loan agreement dated October 24, 2018, it is envisaged to pledge the factory property and resolve other issues.

On April 19, TMP sent a notice to all the founders, including the responsible party – Metalloinvest Holding and Miramonte Investments, to call the next general meeting of participants with a list of issues that are important to make a decision. On May 2 and 5, repeated notifications were sent to the heads of these enterprises (responsible parties) by corporate mail.

“Oskol Electrometallurgical Combine” JSC, which owns 100% of shares of Metalloinvest Holding, registered in Cyprus, informed in its letter dated May 5 that the responsible party refuses to participate in the activities of the joint venture, including the general meetings of the members of the society.

According to the court decision, “Oskol Electrometallurgical Combine” did not object to its exclusion from the list of founders of the company.

“Oskol Electrometallurgical Combine” JSC is a structure of Metalloinvest and belongs to the USM holding. One of the owners of the holding is billionaire Alisher Usmanov.

The second defendant, Miramonte Investments, is also related to Alisher Usmanov, according to the US Treasury Department. This company has not participated in TMP activities since March 2022, including general meetings of the company's participants, and has left the community's requests unanswered.

“The inaction of the responsible parties makes it impossible to take the most important decisions to implement measures for the financial recovery of society, which, in turn, does not allow the company to fulfill its obligations to creditors and puts the company under the risk of bankruptcy,” the Reconstruction and Development Fund claimed.

On June 12, the judicial panel of the Tashkent city court on economic affairs will satisfy the claim and Cypriot companies will be removed from the list of factory founders. It is also determined that 3.3 million soums of court costs will be collected from the defendant.

The foundation appealed the court’s decision and asked to change the decision on the distribution of court costs, to recover the costs from TMP. The reason for the appeal is that the defendants are residents of Cyprus, Uzbekistan does not have a bilateral agreement on mutual legal assistance with this country, and therefore it is impossible to recover court costs from the defendants.

However, the appellate court considers that the plaintiff’s arguments cannot be a basis for imposing court costs on the joint venture under Article 118 of the Economic Procedural Code, leaving the court’s decision of June 22 unchanged.

Founders

The founders of TMP, which initially had a charter capital of €197.8 million (now $154.8 million), are the Fund for Reconstruction and Development (49.9% or €98.7 million) and Metallurgical Technology and Engineering B.V. of the Netherlands. company (50.1%, €99.1 million).

SFI Management Group, which managed the project, wanted to be among the project shareholders. As a result, there was a change in the list of founders, and the share of Metallurgical Technology and Engineering B.V. decreased to 41.9%, while SFI Management Group acquired 8.2%.

After some time passed, Metallurgical Technology and Engineering B.V. company Metalloinvest Holding (Cyprus) took the place of 41.8%, and Miramonte Investments took the place of SFI and became the owner of 8.2%.

At the industrial exhibition held in Tashkent in April 2022, the CEO of “Metalloinvest” Nazim Efendiyev announced that the company “invested and entered the capital of TMP”. Thus, Metalloinvest Holding (Cyprus) Limited company replaced Metallurgical Technology and Engineering B.V. with 41.8 percent, and Miramonte Investments Limited replaced SFI with 8.2 percent.

For information, SFI group belongs to the family of billionaire Fattokh Shodiyev’s brother Kobil Shodiyev, according to Alisher Usmanov in an interview with Forbes. During the visit of President Shavkat Mirziyoyev to the TMP, Kobil Shodiyev made a presentation to the President about the plant.