ZURICH (Reuters) - U.S. sanctions on Russian oligarchs have hit another Swiss company, with steelmaker Schmolz & Bickenbach’s (STLN.S) chairman forced to sever ties with Viktor Vekselberg to help clear the way for a bond placement, a spokesman for the Russian billionaire said on Tuesday.
Vekselberg, whose Renova Group owns a large stake in Schmolz & Bickenbach, had already cut his holdings in Swiss pumpmaker Sulzer (SUN.S) to help it to avoid long-term damage from sanctions targeting Russian President Vladimir Putin’s associates.
Now Schmolz & Bickenbach Chairman Edwin Eichler has been pressured to terminate his contract with Renova to represent the investment vehicle’s interests at the steel company.
Financial institutions had demanded Eichler’s move as a condition of underwriting a forthcoming bond placement, Renova spokesman Andrey Shtorkh said in a statement.
“Renova Group disagrees with the premise of this request and does not accept the interpretation of the sanctions regime put forward by the underwriters,” Shtorkh said.
“Notwithstanding, Renova remains committed to pursuing the best interests of Schmolz & Bickenbach and has consented to such an unprecedented move in recognition of the company’s immediate need for external financing.”
Vekselberg will be left with a single Renova representative, Marco Musetti, on Schmolz & Bickenbach’s board, according to proposals for the April 26 general shareholders meeting. Another Renova-linked board member, Vladimir Polienko, is not standing for re-election.
A spokesman for Schmolz & Bickenbach said the decision for Eichler to cancel his contract with Renova came amid general discussions with banks over how best to navigate the U.S. sanctions.
“It’s definitely a decision to reduce our dependence on them, it has nothing to do with an upcoming bond,” said spokesman Ulrich Steiner.
Schmolz & Bickenbach has a bridging loan of 50 million euros ($62 million) after agreeing in January to buy French steelmaker Ascometal and also used part of a 375 million euro revolving credit facility for the deal.
Steiner declined to comment on any bond placement or name banks with which the company is working.
“We don’t have an immediate need for external financing,” Steiner said, adding that the Swiss company will be able to arrange financing to replace the bridging loan when the timing is right.
Having grown wealthy in the 1990s with Russian aluminium and oil, Vekselberg spent about $90 million on nine jewelled eggs in 2004 from the czar’s imperial court and other art objects from the Forbes family.
($1 = 0.8101 euros)
Reporting by John Miller; Editing by David Goodman