Things may be bad in the USA, but Russia has it worse

Things may be bad in the USA, but Russia has it worse

Steel makers join hunt for Russian state funds

Nov 18 (Reuters) – Russian steel makers Severstal, TMK and Evraz Group are in talks to secure loans from state-controlled banks to help refinance debt incurred to fund expansions in North America this year.

Russia plans to channel at least $50 billion from its foreign exchange reserves into helping state and private companies refinance a total $120 billion of Western loans by the end of 2009.

Following is a list of Russian companies which have received or asked for refinancing help or obtained support from other channels.

STEEL AND METALS

Severstal , Russia’s largest steel maker, is in talks with state bank VEB to refinance 75 percent of a $325 million bond due in February 2009, Chief Financial Officer Sergei Kuznetsov said on Nov. 18.

Steel pipe maker TMK is in talks with four or five state banks to refinance outstanding debt from its $1.2 b

Evraz Group, part-owned by billionaire Roman Abramovich, has requested a $1.8 billion loan from VEB to refinance debt incurred to acquire the Canadian assets of IPSCO, Vedomosti business daily reported on Nov. 18. Evraz declined to comment.

Billionaire Alisher Usmanov has asked for state financial support to speed up the development of the giant Udokan copper deposit in eastern Siberia, and said on Oct. 15 he may also seek refinancing help.

United Company RUSAL, majority owned by Russia’s richest man, Oleg Deripaska, received $4.5 billion from VEB to pay back debt to foreign banks, which it amassed to buy a stake in mining giant Norilsk Nickel, banking sources told Reuters on Oct. 29.

The 25 percent-plus-two shares stake in Norilsk was used as collateral for the loan and UC RUSAL was at risk of losing it if it failed to pay back the debt.

ENERGY

Industry sources told Reuters on Oct. 30 state-run Rosneft , Russia’s largest oil firm, which owes $22 billion to creditors, received around $800 million from the state to repay short-term debts.

LUKOIL, Russia’s second-largest oil producer, has asked VEB for a $1.8 billion loan to refinance its foreign debt, Chief Executive Vagit Alekperov said on Nov. 6.

Russian media have reported the government would lend $9 billion to four companies, including $4.2 billion to state-run Rosneft, $1 billion to Gazprom, $2 billion to LUKOIL and $1.8 billion to TNK-BP (nyse: BP news people ).

Russia’s largest petrochemicals firm Sibur has asked VEB for slightly more than $100 million in order to refinance about 15 percent of the company’s total debt, its chief executive Dmitry Konov said on Tuesday. Sibur is controlled by Gazprombank, the banking arm of gas export monopoly Gazprom.

TELECOMS

VEB agreed to disburse $2 billion to Mikhail Fridman’s Alfa Group to help it pay back a loan to Deutsche Bank (nyse: DB news people ) and rescue Alfa’s large stake in Russia’s No. 2 mobile phone firm, Vimpelcom. The Vimpelcom stake was used as collateral with the bank.

RETAIL

Russian food retailer Magnit said on Oct. 29 it had secured a 2.5 billion rouble ($91 million) credit line from state-controlled bank VTB.

X5 Retail Group, Russia’s largest food retailer by revenue, said on Nov. 14 it had secured 7 billion roubles ($255 million) in financing from VTB.

DEVELOPERS

Vedomosti has reported Russia’s largest developer, PIK Group , would get $300 million from VEB. The government has also said it would spend around $4 billion on buying unfinished residential property at market prices from developers.

The city of Moscow already awarded around $1 billion worth of contracts to PIK, committing to buy property at rates above the market despite predictions, including by developers themselves, that commercial and residential property prices are poised to fall by 25-30 percent in the next six months.

BANKING

The head of Russia’s second-largest bank, VTB, said the bank would seek to tap the government refinancing line. VTB faces $2.4 billion in debt redemptions in 2008 and $9 billion in 2009.

(Reporting by Moscow bureau; Editing by Victoria Bryan)

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