Baikal Paper Mill Asks Putin for Help in Debt Dispute

The employees at Russia’s troubled Baikal Pulp and Paper Mill, located by the world’s largest freshwater lake Baikal, have written to President-elect Vladimir Putin asking him to protect the plant from creditors, a spokesman for the mill told RIA Novosti on Wednesday.

The plant’s workers claim in the letter one of the plant’s core creditors, Basic Element (BasEl) holding company owned by tycoon Oleg Deripaska, made the plant unprofitable a year ago by “hiding” part of its output and acquiring a local electricity power plant, the only moorage in the area and a ski resort.

The staff claim the mill is now profitable, but say BasEl is trying to bankrupt the plant by demanding repayment of a 150 million ruble ($5.11 million) debt. The mill hopes it may be able to repay its debt by instalments from August 30, 2012 to January 30, 2013, its spokesman told RIA Novosti.

The employees asked Putin to resolve the dispute in a “manual mode.”

The mill was out of operation from October 2008 to the start of 2010. In December, a court imposed external management at the plant until June 2012 at the request of Alfa-Bank, the mill’s core creditor.

BasEl says the letter is an attempt by the mill’s external manager, Alexander Ivanov, to avoid paying the plant’s debts and says the firm is not the mill’s only creditor.

“The staff letter … was published on the eve of the first maturity date for debt repayment. This is obvious proof of the unwillingness of the external manager to repay the debts declared by a court,” BasEl said in a statement.

“The mill’s managers do not provide the creditors with any information about the plant’s activities,”. BasEl added. “The mill sells all its products by unclear agreements through offshore firms. According to Basic Element’s information, the plant sold its products at a price slightly above production costs to a firm affiliated with the mill’s external manager in the second half of 2010 and in [the whole] 2011.”


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