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11.11.2008  
  “Kommersant”, Julia Garaeva  
 

TAIF is authorized to announce // The Group of Companies asks for money from “Vnesheconombank”


 
  PSC «AIF» was the first Company from the Republic of Tatarstan to appeal to “Vnesheconombank” with a request to borrow RUB 16 bln for refinancing the credits of “the companies from the Group”. As the experts say, TAIF would, first of all, improve the situation on OJSC “Kazanorgsintez” those debt-to-equity ratio exceeded the limits announced during the issue of euro bonds.

General Director of TAIF GROUP Albert Shigaboutdinov told “Kommersant” that TAIF Group of Companies proceeded with application to “Vnesheconombank” to refinance the RUB 16 bln debt. He said that the funds were raised for “the companies of the Group” without any details on the companies’ names. TAIF became the first company from Tatarstan that asked for assistance from “Vnesheconombank”. Earlier, “KamAZ” announced the desire to receive over USD1 billion (about RUB 27 billion) from “Vnesheconombank”, but “KamAZ” Director for Corporate Finance told “Kommersant” that the application has not been made yet.


As of December 31, 2007, TAIF GROUP includes 67 subsidiary companies, active in the sectors of petrochemicals, refining, building & construction, telecommunications, finance, and services. But, the analysts consider that the larger part of the borrowed funds will be given to OJSC “Nizhnekamskneftekhim” (“NKNH”) and OJSC “Kazanorgsintez” (“KOS”) - the biggest assets of TAIF (TAIF controls 79.3% of “NKNH” voting shares and 52.02% of Kazanorgsintez voting shares). Yesterday, Head of NKNH press-service Ilnur Davletshin refused to say whether the company intended to receive a part of the raised funds. KOS did not comment the official request for explanation from “Kommersant”, as well.

Analyst of IC “Solid” Denis Borisov gives his comments to the last actions of TAIF: “This step was predictable. Both “Kazanorgsitnez” and “Nizhnekamskneftekhim” need the refinancing, as these companies realize the investment programs. But along with the worsening of the market situation and the reduction in the amount of funds from the operational activity, they suffer from the situation with the maintenance of their short-term commitments”. The expert considers that TAIF would use the major part of its credit resources to improve the situation with “Kazanorgsintez”, as “its situation is more serious”. There are no alternative sources of financing for “Kazanorgsintez” for today taking into account that the international ratings of this company are lowered.

Mikhail Sajno, analyst of IC “Brokercreditservice” agrees: “The situation on “Kazanorgsintez” is really serious. For today, the net debt of “Kazanorgsintez” is RUB 26.83 bln including RUB 5.19 bln of short-term borrowings. The debt-to-EBITDA ratio is over 6.0 that gives the right to bondholders to call for payment before the maturity date in accordance with the agreement with the holders of eurobonds (In October 2006, “Kazanorgsintez” placed 5-year eurobonds totaling USD 200 mln to be repaid on October 30, 2011). But the debt leverage of “Nizhnekamskneftekhim” is moderate. The result of three quarters of 2008 indicates the company’s debt level at RUB 18.080 bln. The debt leverage (debt-to-EBITDA ratio) is 1.91, i.e. within normal limits. The short-term debt is about 14% of financial debt that is, as well, affirms that there are no direct threat for the financial debt. This also certifies that “Nizhnekamskneftekhim” will hardly experience any problems with fulfillment of current obligations.”

The expert says it would be difficult for “Kazanorgsintez” to overcome the crisis without the support from the founding shareholders or the state. The cost of bonds fell by 63% within the last week. This indicated the investors’ worries about the financial solvency of this company. The situation can become even worse in case “Kazanorgsintez” fails to prevent the premature payback. The expert continues: “The problematic financial situation on “Kazanorgsintez” multiplies the chances of new issue of shares that will be most probably done in favor of TAIF or new shareholder – “Gazprom” if “Gazprom” decides to invest funds into the Company (from May 2007 the negotiations are carried between the Republic of Tatarstan and the companies of “Gazprom” Group concerning the participation of “Gazprom” in the issued share capital of “Kazanorgsitez”). At the same time, the analysts agree that the government of Tatarstan and Russia would not allow the bankruptcy of the important petrochemical production to happen. They sum up that it was not logical to ignore the bankruptcy of the asset that had received millions of dollars of investment with the investment program coming to its final stage.
 
 
 

 

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