Tue. Jul 5th, 2022


LetterOne, the London-based investment group, is set to escape direct sanctions in Britain after Russian owners including Mikhail Fridman were hit with new asset freezes and travel bans in the UK.

The group had called on the government to clarify its position under the latest round of sanctions as it sought to reassure staff and suppliers to its businesses including UK high street healthcare retailer Holland & Barrett.

In a statement, LetterOne said it believed steps taken to distance its Russian shareholders from the business “mean that LetterOne is not subject to sanctions”.

But it added: “We now need support from regulators and governments to help bring certainty to our position.”

Officials told the Financial Times that businesses such as Holland and Barrett were expected to be allowed to continue operating normally.

However, banks have started to review their credit lines with LetterOne, according to people familiar with the matter, which still might affect its operations.

In 2017, L1 Retail, the retail arm of LetterOne, secured £ 900mn of senior financing from five banks – HSBC, UBS, Citi, Barclays and Société Générale – as part of its acquisition of Holland & Barrett.

A LetterOne spokesman said “partners have raised questions” with the group but added that conversations had been “extremely positive”.

The company previously said it had not been affected after Fridman and his business partner Petr Aven were sanctioned by the EU, given they collectively owned less than 50 per cent of the group, which was the level sanctions “flow down” to operations.

However, their other business partner German Khan was sanctioned by the UK government on Tuesday alongside Fridman and Aven, which took the collective ownership of sanctioned individuals above 50 per cent.

Officials said on Tuesday that the government treated the sanctioned individuals separately, however, with one adding that “no single one of them is considered to have ownership and control”.

UK retailer Holland & Barrett employs about 5,000 people across hundreds of stores in the UK, while about 120,000 jobs are supported through LetterOne’s other investments in the UK, EU and US.

LetterOne has removed all its Russian shareholders from the board and operations, with no ability to influence or benefit from its activities. All dividends will be used to support Ukrainian relief efforts.

It said: “We are doing everything we can to protect employees and deliver our promised aid relief. It is in nobody’s interest that sanctions damage the jobs and communities we invest in. ”

As well as Holland & Barrett, LetterOne has funded the rollout of broadband in East Anglia, alongside Spain’s Dia supermarket chain, a stake in telecoms group Turkcell and a large minority position in German energy group Wintershall Dea.

It operates a team in London out of a Mayfair office.

Khan, Alexei Kuzmichev and Andrei Kosogov were co-founders and senior managers of the business, which was set-up in 2013 as a means of investing the $ 14bn made from the sale of a stake in oil major TNK-BP to Rosneft.

On Tuesday, the EU agreed to a further package of asset freezes and travel bans, including LetterOne shareholders Khan and Kuzmichev.



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