Petropavlovsk considers sale of its operating subsidiaries

The company said it has appointed AlixPartners to assist the board as it explores its options and determines the course of action in the best interest of all stakeholders, including creditors and shareholders.

"These options include the sale of the company's entire interests in its operating subsidiaries as soon as practically possible," it said. "It is not currently clear what return, if any, may be secured for shareholders or the holders of the bonds or notes as a result of this process."

Last month, the UK imposed sanctions on Russia’s Gazprombank, with which Petropavlosk has a $2000m loan. As a result of the sanctions, Petropavlovsk is prohibited from selling any gold to Gazprombank - its sole buyer - and cannot pay interest on its loan. The company also has around $86.7m in revolving credit facilities with Gazprombank.

An interest payment of $560,000 became due on 25 March under the term loan, which the company was and remains prohibited from making. In addition, on 28 March, the rouble equivalent of around $9.5m became repayable under the revolving credit facilities, which also has not been paid due to the regulations.

Petropavlovsk noted that it has limited cash reserves outside Russia and that there are legal restrictions in place in Russia which limit its ability to transfer cash out of the country.

"In addition to the regulation, the company is aware of reports of proposed Russian legislation to make it a criminal offence for persons or entities in Russia to refuse to deal with counterparties on the grounds of the regulations," it said.

"If such legislation is enacted, the board may not be able to ensure that its subsidiaries will comply with the regulations in Russia."

At 0815 BST, the shares were down 17% at 2.49p.