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September 24, 2009

RUSSIA: GAZ blasts bank over debt deal

GAZ, the carmaker owned by debt-ridden billionaire Oleg Deripaska, on Thursday lamabasted Russia's largest private bank for refusing to agree to debt restructuring.

GAZ, the carmaker owned by debt-ridden billionaire Oleg Deripaska, on Thursday lamabasted Russia’s largest private bank for refusing to agree to debt restructuring.

The sharp criticism of Alfa Bank was the latest salvo in what has been seen as a feud between Deripaska – whose wealth has been decimated by the global economic crisis – and the bank’s billionaire owners, news agency AFP said.

Russia’s second largest carmaker said in a statement it had reached a deal with 21 creditor banks on restructuring its debts but could not carry it out because of Alfa’s refusal.

“The completion of this deal, which is unprecedented for the Russian market, is being impeded by Alfa Bank, which has been dragging out the process of signing an agreement with GAZ Group since the end of July,” GAZ said.

GAZ claimed Alfa Bank was holding up the deal despite the fact that the bank was owed only 8% of the carmaker’s total debt of 39bn rubles (US$1.3bn, EUR878m).

“Alfa Bank, despite earlier agreements, is demanding special conditions for itself, effectively disrupting the restructuring process,” GAZ said.

GAZ owner Deripaska and the main shareholder in Alfa Bank, Mikhail Fridman, denied earlier this year that a conflict had broken out between them.

But Deripaska’s complaints about difficulties in restructuring the enormous debts of his sprawling business empire have been seen in the Russian financial press as directed against Alfa Bank.

The bank’s president Pyotr Aven told Vedomosti newspaper in April that “Alfa is not a monster thirsting for blood” and said it was ready to work with Deripaska on restructuring his debts.

Media reports last week said GAZ was planning to slash 14,000 jobs by the end of the year.

Volga sedan builder GAZ and has been tipped as a possible partner for the Magna-Sberbank consortium buying Opel, AFP noted.

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