GAZ has agreed to restructure all of its debt at 4% over the Russian central bank’s official refinancing rate, state-owned Sberbank said.
“This is the result of a judicious compromise, which will allow all parties to exit the situation without a loss,” Sberbank spokesman Alexander Bazarov told Reuters.
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GAZ, controlled by tycoon Oleg Deripaska through Russian Machines, owes RUB39.3bn (US$1.31bn) to a consortium of 22 banks.
The new loan will have a term of five years, and GAZ will not have to make any interest payments for the first six months. In addition, it will not have to start repaying the principal for two years.
The central bank’s current refinancing rate is 8.5%, indicating that GAZ will have to pay 12.5% interest.
Bazarov added that RUB19.7bn of the loan will be secured by a government guarantee, with the remainder backed by GAZ’s production assets as well as a 16.2% stake in the company.
Sberbank will hold the collateral on behalf of the syndicate.
Valery Lukin, who chairs GAZ parent Russian Machines, also said that the company will have to approve any important decisions such as investment strategy and M&A activity with creditors for the next five years, Reuters reported.
