Holland & Barrett is struggling to make a scheduled interest payment to its lenders even though the UK healthcare retailer and its Russian oligarch-backed private equity owner are not under direct sanctions.

LetterOne, the London-based investment group that bought Holland & Barrett in 2017, has so far escaped UK and EU sanctions, even though its Russian owners such as Mikhail Fridman have been hit with asset freezes and travel bans.

But an interest payment the British retailer made on a €415mn loan on Wednesday has not yet reached lenders, according to three people familiar with the matter, because a bank is having issues processing the payment. In contrast, an interest payment on another £450mn loan at Holland & Barrett has flowed through to lenders without issue.

LetterOne confirmed to the Financial Times that “one of the paying agents is having difficulties processing euro payments”.

“We are working with them to rectify this,” the investment group added. “LetterOne is not sanctioned and has had confirmation of this from authorities in the UK and Luxembourg. We are confident the paying agent will make this payment swiftly.”

The delay in the interest payment is the latest example of the obstacles sanctions are creating for companies that have links to Russian oligarchs, even if they have not been directly targeted themselves.

Evraz, the London-listed steelmaker part-owned by oligarch Roman Abramovich who has been placed under sanctions, said this week that it had been blocked from making an interest payment on one of its bonds, before announcing the following day that the situation appeared to have been resolved.

The FT reported earlier this month that banks had started to review their credit lines with LetterOne in light of the escalating measures taken against the Russian billionaires that founded the private equity firm.

A group of Russian oligarchs led by Fridman and his business partner Petr Aven set up LetterOne almost a decade ago to reinvest the $14bn windfall from the sale of their stake in oil group TNK-BP to Rosneft. As well as Fridman and Aven, other LetterOne backers such as German Khan have also been hit with sanctions this month.

In response to the measures taken against its owners, LetterOne has removed all of 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.

As well as Holland & Barrett, LetterOne has funded the rollout of broadband in England’s East Anglia region and is the majority owner of Spain’s Dia supermarket chain. It also holds a stake in Turkish telecoms group Turkcell and a large minority position in German energy company Wintershall Dea.

Holland & Barrett employs about 5,000 people across hundreds of stores in the UK.

Additional reporting by Owen Walker



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