Bromley-Martin: Western Terminal Was a Promising Start-up

Justice Hildyard of the High Court of England and Wales continued proceedings on suit of Bank St. Petersburg vs Russian businessman Vitaly Arkhangelsky and Arkhangelsky's counterclaim against the bank.

On March 2 and 3, Robin Bromley-Martin, a well-known specialist in port project management who back in 2008 tried to helpArkhangelsky to raise funds for development of the Western Terminal bought by OMG Group, in several foreignbanks in was cross-examined in the court.

Answering the questions of attorney Tim Lord representing the Bank of St. PetersburgBromley-Martin told detail about the preparation of an information memorandum for potential lenders. He stressed that bankers are primarily interested in the potential of the project performance rather than in the initial value of franchise.

Bromley-Martin said, the construction of a railway stub directly into the terminal territory was a "one month" work while its existence would immediately increase the potential capacity of the port facility. He and Arkhangelsky discussed the terminal switching to containers because that move would significantly increase the company's turnover, Bromley-Martin added.Based on his 30-year experience in project financing, Bromley-Martin believed that the transformation of the West Terminal in a container port would take about five years. The development was planned in several stages so as the terminal could start generation of profit in the first year. Even though the company would finish each one of the first years with a loss, Bromley-Martin said it is usual for all infrastructure projects.

Arkhangelsky's plan for development included the upgrade of two berths; the reclamation of the adjacent water area with removal of an 'anti-torpedo'islandin front of the port; the building of a hard standing storage area; the purchase of new cranes and other handling equipment; and the construction of a new berth.

According to Bromley-Martin, in 2008, the Western Terminal was in a "start-up mode" and its financial problems were typical for a start-up. The project needed a loan of about $300 million for five years, and suchbanksas BNP Paribas and Fortis showed their interest.

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The bank claims that Arkhangelsky, who, together with his family, left Russia in 2009 and was granted political asylum in France, did not settle with creditors and tries to recover a debt.

Archangelsky in his statement of claim says that during the global financial crisis the bank agreed to defer payment on loans for six months. As a collateral, the bank demanded Archangelsky to transfer the shares of companies that were a part of his Oslo Marine Group - West Terminal port complex and Scandinavia insurance company, the owner of a half of Onega terminal. Before the stipulated term expired, the bank demanded loan repayment and later used its political contacts including top law enforcement officers and St. Petersburg Governor Valentina Matvienko, sold the shares to a sister firm at a lower price and changed the executive of Arkhangelsky's companies. He estimates the damages at $500 million.

The course of the trial will be covered by the press-office.

Contact: Natalia Khmelik natalya.hmelik@gmail.com