24 Sep 2009 13:24

Alfa Bank won't accept terms of GAZ debt restructuring

MOSCOW. Sept 24 (Interfax) - Alfa Bank does not plan to accept the current terms of the agreement for restructuring debt at GAZ , both the bank and the auto maker told Interfax.

GAZ "has signed the final agreement on restructuring debt with 21 creditor banks, including a syndicate of foreign banks. However, the conclusion of this deal, unprecedented for the Russian market, is being blocked by Alfa Bank, which has been dragging out the signing of the agreement with the GAZ Group since the end of July, when the agreement on the principles of the restructuring was reached with the creditor banks," a GAZ official said.

Alfa Bank's deputy CEO, Vladimir Tatarchuk, told Interfax that the bank "is ready to sign on restructuring GAZ debt, but the signing of those documents on the part of [Oleg Deripaska's] Basel group [which controls GAZ] was predicated on an agreement of the terms of debt restructurings at other Basel enterprises."

"We have not in fact reached agreement on those. Therefore, Alfa Bank reserves the right to defend its interests in court," Tatarchuk said.

But Basel spokesman Sergei Babichenko told Interfax it is Alfa Bank that "is making the signing of the restructuring agreement conditional on the repayment of debts by other Basel group businesses, which operationally and technologically have no connection with GAZ."

GAZ currently owes $500 million in principal on the Alfa Bank loan, Babichenko said. Alfa Bank said in July the principal debt equaled $800 million.

"The terms of the restructuring provide for the equal rights of all banks without exception. Meanwhile Alfa Bank, despite the agreements reached earlier, is demanding exclusive terms for itself and is in fact disrupting the restructuring process," a GAZ official said.

"Not one other creditor bank has advanced such demands. Moreover, Alfa Bank's actions are preventing the receipt of state guarantees, allocation of which was approved in early July by the commission on raising the stability of the Russian economy chaired by First Deputy Prime Minister Igor Shuvalov," the official said.

A source close to the restructuring negotiations told Interfax he suspects that GAZ and Alfa Bank disagree on exactly which assets relate to the GAZ group. Another source close to the negotiations asserts that in July the bank and GAZ reached a principle understanding on the restructuring, but that Alfa Bank later revised the terms of the agreement, although the first source denies that claim.

The second source said that in September GAZ paid $120 million to Alfa Bank in partial repayment of the debt.

Under the terms of the restructuring agreement reached by GAZ and the other creditor banks, the loans would receive a five-year extension with a two-year deferment on principal payments and a six-month deferment on interest payments.

Alfa Bank is currently in negotiations with nine Basel companies.

Mikhail Fridman, the chief beneficiary of Alfa Bank, and Deripaska made a joint public statement in March that no conflict between them was possible due to their close friendship. However, the situation has not improved since then.

Indeed, Alfa Bank recently initiated bankruptcy proceedings against at least two Basel companies Baikal Pulp and Paper Mill and Glavmosstroy. In addition, Alfa Bank is the only member of the GAZ creditors' committee to reject the terms of the debt restructuring agreement.

For its part, Basel has sought to have a court invalidate or amend the loan agreements with Alfa Bank on the grounds that economic conditions have changed dramatically.