Introduction

If you hold shares in Evraz plc, the court proceedings in Moscow this June demand your close attention. On May 26, 2025, JSC Evraz KGOK, Evraz’s Russian mining and steel subsidiary, filed a claim seeking repayment of roughly 200 billion rubles (plus about US $173 million) of intra-group loans. Crucially, KGOK has asked the Moscow Arbitration Court to foreclose on the shares that Evraz Group SA and Evraz plc own in key Russian operations such as NTMK (Nizhny Tagil Iron & Steel) and Yuzhny Stan. If the court grants foreclosure, those shares will be sold at auction to satisfy the debt.

These developments come after nearly three years of trading suspension and sanctions-related upheaval. Evraz plc’s listing on the London Stock Exchange was suspended in March 2022 following UK government sanctions tied to Roman Abramovich’s stake and broader restrictions on Russian-linked entities. More recently, Evraz’s Russian subsidiary NTMK was formally designated an Economically Significant Organization (ESO) on January 24, 2025, freezing foreign shareholders’ voting rights and dividends under Russian law. Evraz plc itself remains on a “watch list” for potential future ESO designation but has not yet been subjected to the ESO process. With foreclosure and auction now looming, your indirect ownership of Evraz’s core steel and mining assets in Russia could be swept away entirely.

With a closed-door hearing scheduled for June 3, 2025, it’s vital to grasp what’s at stake, why it matters for your investment, and what realistic outcomes you can anticipate.

The June 3 Court Hearing

The foreclosure claim centers on intra-group loan agreements between Evraz’s Russian subsidiaries and their foreign parents. KGOK argues that Evraz Group SA and Evraz plc have defaulted on these loans, and is asking the court not only for the cash owed but also for the right to seize the equity interests in Russian operating companies. Under Russian civil procedure, foreclosure allows a secured creditor to force the sale of pledged assets, in this case, shares in NTMK, Yuzhny Stan and other units.

If the court authorizes foreclosure, it will set up a public auction with a reserve price, ideally based on an independent valuation report, and conduct at least two bidding rounds. Any bidder meeting or exceeding the reserve price can purchase the shares; if no bids succeed, KGOK as the secured creditor simply takes ownership. For Evraz plc shareholders outside Russia, a successful foreclosure effectively extinguishes your economic interest in those Russian businesses, because the parent company’s stakes will be sold off or transferred directly to the creditor.

How Foreclosure and Auction Work

Russian foreclosure auctions begin with a court-determined reserve price that reflects the shares’ estimated market value. Typically, this reserve is informed by an independent appraiser’s report to prevent fire-sale outcomes. The auction proceeds in two rounds: if no bidders meet the reserve in the first round, a second round offers the shares at the highest prior bid or a reduced reserve. If the shares still go unsold, the creditor, Evraz KGOK, acquires them outright.

Although foreign investors are not legally barred from bidding, practical hurdles, UK and EU sanctions, ruble-only deposits, local bank accounts and regulator approvals, make participation nearly impossible. Sanctions restrict non-Russian entities from moving funds into and out of Russia, while capital controls limit foreign-exchange transactions. As a result, domestic buyers or KGOK itself will almost certainly take the shares, consolidating control of Evraz’s Russian operations under local interests.

Russia’s ESO Law and Its Impact

On January 24, 2025, Evraz’s NTMK subsidiary was added to Russia’s list of Economically Significant Organizations (ESO). ESO designation immediately suspends foreign shareholders’ rights to vote, receive dividends and transfer shares indefinitely. While ESO status alone does not transfer share ownership, it freezes corporate governance powers and income streams for non-Russian investors.

The foreclosure mechanism complements the ESO law by moving beyond mere suspension, actually stripping economic ownership of the assets. Together, these measures ensure that foreign shareholders are first disenfranchised and then potentially divested of their stakes in Russia’s steel plants, iron-ore mines and vanadium operations. For anyone whose portfolio still carries Evraz plc shares, this dual legal framework represents the end of any meaningful link to Evraz’s Russian business empire.

What If the Hearing Fails?

Though unlikely, the court could reject KGOK’s foreclosure request. In that case, Evraz Group SA and Evraz plc would retain their shares in the Russian subsidiaries. However, this would not restore trading on the London Stock Exchange, suspended since March 2022, nor would it unblock dividends, still frozen under UK sanctions and Russian ESO rules. Shareholders would continue in limbo: technically still owning the shares but with no market, no voting rights and no income until both sanctions and ESO suspensions are lifted, a process with no clear timeline.

A failed foreclosure merely prolongs the status quo rather than reversing any loss. Trading suspension would remain, and shares would still be disconnected from their underlying assets. Relief would require broader shifts, sanctions relief, ESO deregistration or a successful geopolitical resolution, none of which can be guaranteed.

Can't the Intra-group Loans Simply be Reapid?

At first glance, it might seem that Evraz Group SA or Evraz plc could sidestep the foreclosure entirely by repaying the 200 billion rubles (plus US $173 million) intra-group debt before the hearing. However, several practical and legal hurdles make this all but impossible.

First, both parent companies are under strict UK and EU sanctions that freeze their assets and restrict foreign-exchange operations. Even if Evraz plc has sufficient cash on its balance sheet, moving rubles into Russia requires approval from the Central Bank of Russia and compliance with capital-control rules, which are currently skewed against “unfriendly” jurisdictions. Sanctions block the banks and payment rails that would normally facilitate such a transfer.

Second, the loan agreements themselves are likely structured with default triggers and acceleration clauses. Once KGOK has initiated court proceedings, the debt can be declared immediately due and payable, but repayment still must occur before the foreclosure order. By the time any funds clear regulatory scrutiny, the court may already have issued its sale directive.

Finally, sanction-compliant counterparties who could receive and disburse the repayment funds are scarce. Russian law requires that intra-group settlements pass through designated channels that foreign entities simply cannot access today. In short, the combination of legal acceleration, capital-control mechanisms and sanctions prevents a clean repayment from nullifying the foreclosure action.

What Shareholders Retain

Assuming foreclosure succeeds, foreign shareholders lose all economic interest in Evraz’s Russian operations. Nevertheless, non-Russian and Russian investors will still own Evraz plc’s non-Russian divisions, such as its North American steel mills, and any cash surplus generated if auction proceeds exceed the secured debt. That surplus bolsters the parent company’s balance sheet, indirectly benefiting everyone who retains Evraz plc shares.

Post-foreclosure, the value of your holding will depend on these overseas businesses and the cash windfall. While nowhere near the scale of Evraz’s Russian assets, these operations remain valuable and capable of generating revenue. Investors should recalibrate expectations: your exposure shifts from the vast Russian resource base to a leaner portfolio of non-Russian assets.

Even Russian shareholders, who retain direct corporate rights over domestic operations, will find their indirect ownership of Evraz plc’s non-Russian businesses subject to the same London Stock Exchange suspension and international sanctions affecting the parent company. In reality, this means both foreign and Russian investors must rely on the performance and eventual corporate restructuring of the non-Russian divisions to realize any value, as trading and dividends remain frozen until a sanction-free successor is established.

Options for Investors

In practice, options are limited. Shareholders can challenge auction terms or procedural irregularities in Russian courts, though success is doubtful in the current political climate. International arbitration under bilateral investment treaties may offer a theoretical remedy, but enforcement against on-shore Russian assets is notoriously complex and time-consuming. The most pragmatic path lies in diplomatic and regulatory pressure: encouraging Western governments to secure shareholder protections or compensation in any future peace or sanctions-relief negotiations.

Meanwhile, engage actively with Evraz plc’s board and management (the next Evraz AGM has just been scheduled for 11:00 a.m. UK time, on Friday 27 June 2025 at Pasley-Tyler & Co. Ltd, 42 Berkeley Square, London W1J 5AW). Seek transparency on contingency plans, corporate restructuring, asset spin-offs or strategic disposals, that could isolate non-Russian businesses into a standalone, sanction-free entity. Such measures would be the only realistic route to restoring liquidity and unlocking value for shareholders.

Conclusion

The June 3 hearing is a watershed moment for Evraz shareholders. A successful foreclosure is likely to permanently sever non-Russian shareholders' economic links to Evraz’s Russian operations, converting any surplus auction proceeds into cash but leaving the core assets in domestic hands. Even if foreclosure fails, trading and dividends remain frozen under UK sanctions and Russian ESO suspensions, perpetuating a state of legal and financial limbo.

Bottom line: Stripping out Russian assets alone won’t lift the sanctions or trading suspension on existing Evraz plc. Only a full corporate restructuring (spinning off the non-Russian businesses into a stand-alone, sanction-free successor) could realistically restore trading, and even that would require many months of intricate legal and regulatory work. I hope I'm wrong, but Shareholders should prepare for a new era, focusing on the remaining non-Russian assets, potential cash proceeds and active engagement in the geopolitical and corporate governance processes that will determine Evraz’s future.

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Disclaimer

This article is for informational purposes only and should not be considered financial advice. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions.