Research and Production Corporation United Wagon Company of PJSC NPK UWC

Railway holding NPK "United Wagon Company" ― one of the participants in the wagon building market in the "gauge 1520" space. The company is an integrated provider in the field of production, transport services and operational leasing, engineering and servicing of freight cars.

Aktivs

The holding company NPK UWC (as of the end of May 2023) includes:

• JSC "Tikhvin Carriage Building Plant,"
• OOO SPC Pruzhina and
• leasing companies under the RAIL1520 brand.

Financial performance

2023

Profit - 8.2 billion rubles

The revenue of PJSC Scientific and Production Corporation United Wagon Company (UWC) in 2023 reached 2.65 billion rubles, which is 39.1% more compared to 2022. Net profit in 2023 amounted to 8.2 billion rubles, while in 2022 the net losses of the largest manufacturer of freight rolling stock in Russia with increased carrying capacity were measured at 16.4 billion rubles. Such reporting under RAS was published in early April 2024.

According to Interfax, citing UWC materials, in 2023 the company's cost of sales amounted to 2.87 billion rubles, an increase of 1.9 times compared to a year ago. Gross loss amounted to 225 million rubles, while in 2022 gross profit amounted to 398.5 million rubles.

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Unsplash

As of the end of 2023, the assets of the United Wagon Company include Tikhvin Wagon Building Plant, TikhvinChemMash Machine-Building Enterprise, TikhvinSpetsMash Specialized Freight Car Production Enterprise, the largest spring manufacturer in Russia SPC Pruzhina, leasing Rail 1520, the assembly plant TSZ Titran Express, as well as VNII transport technologies.

In November 2023, UWC announced the successful completion of an additional issue of the company's shares. According to the results of the exercise of the preemptive right and OTC placement, the group earned 25.95 billion rubles and placed about 2.79 billion shares. The funds raised as a result of the additional issue will be used to reduce the company's credit burden. The remaining part will be aimed at implementing the investment program, including increasing its own production autonomy in the context of import substitution, which will open the way to an increase in the fundamental value of the company.^[1]

Unexplained rise in trading in company shares on the Moscow Exchange 300 times

From the average price in the second half of 2022 to its maximum in early September 2023, UWC shares rose almost 6 times, and from the beginning of the year the growth was at the moment 3.8 times. This is not a record for third-fourth-tier stocks this year, because there are stories with an increase of 8-13 times since the beginning of the year.

UWC shares reached 300 rubles, which is significantly less than 700-800 rubles, which were relevant in 2015-2018. The rebound from the bottom was very intense, not even a historical maximum, however, from September 5 to September 14, 2023, the company's shares collapsed 3.7 times and recovered almost twice in a couple of days.

The average monthly trade turnover in July-November 2022 was 330 million rubles, but in August 2023 the trading turnover for the month amounted to 25 billion and for incomplete September almost 50 billion were traded. The growth in trading activity is about 250-350 times from the typical activity that was observed in 2022.

At the auction on September 18, trade turnover amounted to a record 11 billion rubles, which is a lot. For comparison: Sberbank - 7.5 billion, Lukoil - 6 billion, Gazprom - 3.6 billion, and MMC Norilsk Nickel - 1.5 billion.

Loss of 2.9 billion rubles in the first half of the year and negative capital of 45 billion rubles

The company continues to generate losses in 1P 2023 (loss of 2.9 billion with revenue of 33.8 billion rubles), although it is better than in 1P 2022 (loss of 11 billion with revenue of 27.4 billion rubles).

A significant contribution to the company's losses is made by interest expenses on loans and bonds, which amount to an average of 5-7 billion rubles per year.

UWC has a negative capital of 45.1 billion (in fact, bankrupt) and debts of 73 billion with a cash volume of 7.1 billion (net debt of almost 66 billion) with forecast revenue for the year of about 70 billion rubles (one of the highest debt loads among all public Russian companies).

UWC has a consistently negative free cash flow on average of about 7 billion rubles per year over the past 7 years, i.e. in order to cover current operating and investment activities (capital expenditures), the company is forced to permanently increase debt, at least at a pace of 7-10 billion annually, in order to close the hole in the balance sheet and disposal assets.

UWC will have to repay 59.6 billion rubles in 2P 2023. UWC is owed mainly to its subsidiary UWC-finance and to Bank Trust for 41 billion, where 27 billion at a floating rate tied to the key rate of the Central Bank of the Russian Federation.

Breach of obligations to pay debts. Plan of placement of shares with par value of 1 RUB

In 1P 2023, UWC violated a number of obligations to pay debts, including covenants provided for by loan agreements with Bank Trust and Unicredit Bank, and one of the payments should be September 30, 2023.

Creditors did not apply sanctions against UWC and are ready to consider various options for settling debts, including debt restructuring, or partial repayment from funds received as part of an additional issue.

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At the same time, the company is covered by lawsuits. Vega-Invest filed a lawsuit to recover debt on the issue of bonds 01 for 17.3 billion rubles, and Region-Trust for another 6 billion rubles.

2022: Loss of 18.7 billion rubles

UWC does not get out of losses. From 2015 to 2022, the accumulated loss amounted to 69.8 billion rubles (losses of 18.7 billion in 2022, 6.8 billion in 2021 and 22 billion in 2020). The accumulated loss for the entire time is 74.9 billion.

History

2024

UMMC shareholder Andrey Bokarev bought out 25% of the shares of the United Wagon Company

At the end of April 2024, Andrei Bokarev, a shareholder of the Ural Mining and Metallurgical Company (UMMC), announced the acquisition of a 25% stake in the United Wagon Company (UWC). According to the businessman, four shareholders of the Ural Mining and Metallurgical Company (UMMC) bought out the largest manufacturer of heavy-duty freight rolling stock in Russia from Trust Bank.

UWC has private shareholders, I am one of them. They bought UMMC shareholders, but not at UMMC, but these are private packages, "Bokarev said on the sidelines of the congress of the Russian Union of Industrialists and Entrepreneurs (RSPP).

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Freepik

All partners bought the same packages - just under 25% of UWC shares. Thus, a 96% stake in UWC was bought from Trust. At the same time, Andrei Bokarev did not name the buyers. He added that the deal was closed back in December 2023.

UWC is the leading manufacturer of freight cars in Russia. By April 2024, the company's product line includes more than 70 models of new generation wagons. Among its assets are the Tikhvin Carriage Building Plant, TikhvinChemMash, TikhvinSpetsMash, SPC Pruzhina, TSZ Titran-Express, leasing company Rail 1520 and VNII transport technologies. Bokarev is also a co-owner of Transmashholding, the largest manufacturer of passenger cars.

As the head of the Trust, Alexander Sokolov, said in 2021, Otkritie and Trust planned to leave UWC as soon as the favorable moment came. By that time, the financial situation of the company was in question - a subsidiary of the wagon manufacturer UWC Finance made a technical default on bonds, and was later declared bankrupt. At the time of the transaction, the company's position improved.^[2]

Appointment of Irina Olkhovskaya as CEO

At the end of January 2024, it was announced that Irina Olkhovskaya was appointed the new general director of the United Wagon Company (UWC) research and production corporation. In this post, she replaced Sergei Limarenko, who headed the largest freight car manufacturer in Russia since October 2023. Read more here.

2023

Bank Trust sold a stake in the United Wagon Company with a loss of 20 billion rubles for itself

In mid-February 2024, Alexander Sokolov, chairman of the board of the Trust non-core assets bank, spoke about some details of the deal to sell a stake in the United Wagon Company (UWC). According to him, the credit institution left the capital of UWC with a loss of 20 billion rubles.

"According to UWC, we have a negative delta," Sokolov said, referring to the difference between the value of the asset at the time of its receipt on the balance sheet of Trust and the sale price.

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Pexels

According to the head of Trust, the share in the company "was sold outside the bank's standard processes." He also said that UWC was not sold through an auction - it was a direct deal.

And the arguments to this: this is a system-forming company, which today occupies about 75% of the freight car building market, - said Alexander Sokolov, whose words are quoted by RBC.

According to him, the early exit was also due to "possible technological risks" associated with a shortage of equipment. As Sokolov added, initially Trust planned to work with UWC until the end of 2026, but this did not happen due to sanctions and "extreme sensitivity to technological risks."

The top manager of the bank of non-core assets noted that as part of the transaction, both shares and credit obligations of the company were transferred to the buyer. Before the sale of UWC, Trust actually sanitized the company through an additional issue of shares, Sokolov said.

We converted part of the debt into capital, respectively, recovered the company. They formed more than 90% of the shares on the balance sheet and, together with the debt, sold so that the buyer did not have to deal with reorganization. So that the buyer is engaged in the development of production, ensuring the stability of cargo transportation in the Russian Federation, "he said.

Earlier, sources from Frank Media, RBC and Vgudok said that the asset could have been sold to Transmashholding structures^[3]

Sale by Trust Bank of a block of UWC shares to a profile investor

Bank of non-core assets Trust sold its stake in the United Wagon Company (UWC) to a profile investor, Alexander Sokolov, CEO of the credit institution, told RBC in December 2023. According to him, this was a direct sale without announcing the bidding that Trust usually conducts when selling assets. The financial terms of the transaction and the buyer are not disclosed.

"We sold the rights to claim loans and our stake 93.6%, which was formed as a result of the additional issue. The deal is closed, the money has come, "Sokolov[4]

The representative of Trust explained the reluctance to name the UWC buyer with considerations of "the importance of this transaction to the state."

Plans to sell the company were known back in September 2023, and then two possible buyers were named. It was assumed that UMMC or TMH could buy UWC, but one way or another the deal will be in the interests of the Ural Mining and Metallurgical Company^[5]

Trust increased its stake in UWC to 93.6% by buying back shares worth 25 billion rubles

Bank of non-core assets Trust increased its stake in the United Wagon Company (UWC) from 27.76% to 93.6%, having bought back its shares by 25 billion rubles. The press service of the largest manufacturer of freight trains in Russia of increased carrying capacity announced this on November 22, 2023.

In total, UWC placed 2.79 billion shares and raised 25.95 billion rubles. Over-the-counter placement of the additional issue lasted from November 9 to 22, 2023. The total volume of placement amounted to 12.5 billion shares each at a price of 9.3 rubles with a face value of 1 ruble.

Bank of non-core assets "Trust" increased its stake in UWC to 93.6%

As noted in UWC, the company will send 25 billion rubles received from the additional issue of shares to repay existing loans. By the end of June 2023, the company's debt was measured at 64.6 billion rubles. The rest of the funds will go to the implementation of the investment program, "including increasing its own production autonomy in the context of import substitution, which will open the way to an increase in the fundamental value of the company," UWC said in a statement. The press service of Trust reported that the bank is going to sell the purchased stake in UWC.

The successful additional issue of shares will also allow UWC to strengthen financial stability and implement a large-scale investment program aimed, among other things, at increasing its own production autonomy in the context of import substitution, the company noted in September 2023, when it became known about negotiations with Trust on debt restructuring with its partial repayment.

The United Wagon Company manages car-building production in Tikhvin, the Titran-Express car repair company, the engineering center, the operator Unicon 1520, is engaged in the production of components for rolling stock.^[6]

Appointment of Sergei Limarenko as general director

On October 2, 2023, the United Wagon Company (UWC) announced the change of its CEO. He appointed Sergey Limarenko, who headed the Russian manufacturer of freight railway cars instead of Dmitry Olyunin. Read more here.

2022: CEO change

On November 7, 2022, Dmitry Olyunin was appointed the new General Director of the United Wagon Company NPK (NPK UWC). In this position, he replaced Timofey Khryapov, who headed the company since 2018. Read more here.

2021: Bond default

The United Wagon Company (UWC) on November 24, 2021 did not pay investors over 16 billion rubles. We are talking about the release of the 01 series, which in 2013 was placed by the "subsidiary" of the company - "UWC Finance." The amount of the issue is 15 billion rubles. On November 24, its nominal value was to be repaid and coupon payments were made. The total amount of planned payments is 16.34 billion rubles.

Earlier, Alexander Nesis and Boris Mints transferred UWC in exchange for loans to Otkritie Bank.

2018: Withdrawal from the ownership of Vostok1520

As representatives of NPK UWC clarified to TAdviser, in 2018 NPK UWC PJSC left the ownership of Vostok1520.

2014: Assets

As of July 2014, the holding included: Tikhvin Carriage Building Plant CJSC, SPC Pruzhina LLC, Vostok1520 LLC transport company and leasing companies under the RAIL1520 brand. NPK UWC has a design bureau, the All-Union Research Center for Transport Technologies, as well as an advisory scientific and technical council.

The United Wagon Company Research and Production Corporation is one of the leaders in innovative wagon building in the 1520 gauge space. The railway holding is an integrated provider in the field of production, transport services and operational leasing, engineering and servicing of freight cars with improved technical and economic indicators.

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