The European Bank for Reconstruction and Development (EBRD) has signed a series of agreements to restructure its loans to the Russian car and truck manufacturer OAO KAMAZ. These include a guarantee agreement signed by the Russian Federation in respect of $US70.5 million of the KAMAZ debt while the remaining KAMAZ debt to the EBRD is to be converted into common equity of the Company.

"The EBRD welcomes this settlement and looks forward to working with the other shareholders of KAMAZ on ways to improve the performance of the company," said Mary Ellen Collins, senior banker at the EBRD in charge of KAMAZ restructuring.

"We are happy that all parties are committed to the elimination of unprofitable operations, strengthening management, increasing efficiency, improving the use of resources and disposing of surplus assets, as well as taking steps to see that shareholder interests are protected," Collins added.

The restructuring of KAMAZ's debt to the EBRD was agreed in principle last spring and set out in a memorandum of understanding signed by the Russian Federation, the EBRD and KAMAZ on April 6, 2000.

In November 1995 the EBRD agreed to lend KAMAZ $US100 million to finance a major overhaul of the company's operations. By the end of March 2000, the total obligations of KAMAZ to the EBRD amounted to $SU141 million in principal and overdue interest.

At a ceremony, the EBRD and KAMAZ signed a document committing KAMAZ to repay the $US70.5 million in half-yearly instalments from 2002 to 2012. This portion of the KAMAZ debt is underpinned by a guarantee agreement signed by the Ministry of Finance on behalf of the Russian Federation.