Several Russian cos may face financial difficulties, debt restructuring mechanisms need to be updated - econ minister

MOSCOW. Oct 16 (Interfax) - Today's challenging macroeconomic conditions could cause financial difficulties for several Russian companies and debt restructuring mechanisms need to be updated to enable them to protect themselves from creditors and continue operating, Economic Development Minister Maxim Reshetnikov said at the Russian Energy Week plenary session.

"The covenants on the balance sheets of many companies are currently such that there is probably no appetite for further debt growth, especially at current interest rates. On the other hand, there's the regulator's policy, which by all means restricts further lending to large companies, including government-related ones, through macroprudential regulation," he said.

"Also, many of our large companies are carrying out very large projects by global standards, which means that our banking system's opportunities, it's scope let's say, are being used to the limit. The state, through development institutions, has the opportunities to support such projects, but over the past two or three years, we have also used those opportunities to a large degree," the minister said.

"In this regard, in such difficult conditions, there are several challenges. Clearly, there will be development - there has to be, and the resources for it exist, but some transformation of the economic model is needed. First, of course, it's important to complete all the investment projects that have been started. The government, along with major companies, has probably made all the key decisions over the past year or two. We've provided equity, guarantees and other ways to deliver these projects," Reshetnikov said.

"But at the same time, we need to make our system more flexible. We're saying here that a number of companies may face financial difficulties, so it's important for us to adjust debt restructuring mechanisms," he said.

"Such mechanisms exist, but they are largely voluntary. We need collective mechanisms. To this end, we've now drafted a new version of the bankruptcy law and are carrying out a comprehensive overhaul, specifically with a view to giving companies recourse to certain elements of protection from creditors and, without interrupting operations, to repay their debts, so that companies have these options," Reshetnikov said.