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. Last Updated: 07/27/2016

Sedmoi Kontinent Owner Cedes Stake in Debt Deal

The owner of grocery chain Sedmoi Kontinent has agreed to cede 15 percent of the company in exchange for the restructuring of $560 million in debt, Kommersant reported on Wednesday.

The newspaper said Alexander Zanadvorov, who owns 74.8 percent of Sedmoi Kontinent, would relinquish part of his stake to French bank Natixis, Russia's Alfa Bank and U.S. investment fund Spinnaker Capital.

The debt would be converted into eight-year bonds worth $630 million — the loan plus interest — with an interest rate of LIBOR plus 6 percent, Kommersant reported, citing a document signed by concerned parties at the beginning of November.

Sedmoi Kontinent declined immediate comment on the report.

"This news is negative for Sedmoi Kontinent shareholders as the company's debt will increase from $441 million to $1.0 billion, which is critical for the business, pushing the company's net debt/EBITDA to seven times," VTB Capital Research said in a note.

Natixis had acquired a 45 percent stake in Sedmoi Kontinent as collateral on a loan, while Spinnaker and Alfa Bank had also received stakes in the company as collateral, banking sources told Reuters in October.

Zanadvorov borrowed $560 million from Deutsche Bank in 2007 to acquire shares in Sedmoi Kontinent from business partner Vladimir Gruzdev. In November 2008, Zanadvorov faced a margin call on the loan.