GAZ Group has agreed terms for debt restructuring with a committee of creditors, business daily Vedomosti reported on Monday, citing Valery Lukin, CEO of Russkiye Mashiny [Russian Machines], which holds 60% of GAZ.

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The group has sent the debt restructuring agreement to banks for their approval, Lukin said.


Twelve Russian banks, including VTB Bank, Sberbank, Gazprombank, Alfa Bank, UralSib, and Russian subsidiaries of Commerzbank, Swedbank, and Raiffeisenbank, participated in the talks.


A syndicate of foreign banks, which includes Royal Bank of Scotland, Unicredit, Natixis, Commerzbank, and HSBC and controls US$215m of GAZ Group’s debt, will also sign a debt restructuring agreement.


Under the agreement, the banks are expected to provide a five-year extension on loan repayments to GAZ Group, the daily said. The current interest rate on the loans will be 17% in 2009 and will be 4% more than the Central Bank of Russia’s (CBR) refinancing rate after restructuring. The banks will have the right to request revisions of the interest, but will be required to give an explanation for such requests.

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The debt restructuring agreement is expected to be signed by 1 August, according to Vedomosti.


However, Alfa Bank stated that it does not plan to sign the debt restructuring agreement, as it disagrees with the debt restructuring terms, a bank representative told the daily.


Last week, the Russian government decided to provide up to 20bn rubles in guarantees to GAZ Group.


At the end of May, the group owed 42bn rubles to banks, according to earlier reports.