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23.10.2009  
  «Expert» magazine,  
 

Must Meet Deadlines


 
  Sberbank may give a credit to the amount of 30 billion rubles to a Tatarstan petrochemical enterprise “Kazanorgsintez” (KOS) for refinancing of the debt of the “polyethylene giant” (the enterprise produces 38% of Russian polyethylene and has control over more than half of the production of polyethylene tubes in Russia) that has reached USD 1 bln. This info was given to “Interfax” by a representative of KOS controlling shareholder – a Tatarstan group TAIF. “The thing is that the amount of the credit must cover the amount of the enterprise’s debt”, he said.
These words may have been considered as «vain wishes» from the part of the private company TAIF controlled by Albert Shigaboutdinov and the younger son of the President of Tatarstan Mentimer Shaimiev – Radik. However, indeed, provision of the 1 bln. USD credit by one of the largest Russian banks to a republican petrochemical enterprise is more likely – KOS now is being rescued from bankruptcy by the most high-ranking government officials. As early as in the summer, when visiting Kazan, Senior Vice-Premier Igor Shuvalov stated that the members of the Government Commission on Improvement of Sustainability of the Development of Russian Economy under his presidency supported the initiative of giving state guarantees to «Kazanorgsintez» to the unprecedented amount in the industry – up to 15 bln. rubles. «We have discussed the question how this enterprise would develop in the future and continue the modernization of its production so that the burden of debts would not destroy the enterprise and it would be protected from experiencing hard pressure from the credit organizations with regard to repayment of the debt», – he told to the reporters highlighting that “due to the crisis” KOS “cannot service the debt accrued to the credit organizations on the old terms and conditions”. At the same time Shuvalov emphasized that the problem of KOS is that the enterprise just didn’t have time to finish renovation of the plant and reach impressive performance.
The debts of KOS, indeed, had been being accumulated since 2005 when a massive program of modernization was launched in the enterprise with the aim to switch from production of basic monomers to high-margin products of advanced processing. Till 2008 everything ran in accordance with the plan. In April of the last year Albert Shigaboutdinov announced the beginning of the second stage of modernization of the polyethylene giant which would allow doubling the production output in three years. Simultaneously, in comparison with 2007, the earnings of KOS must have increased five times and amounted to 110 billion rubles. And the annual profit of KOS, according to Shigaboutdinov, must have grown to 30 bln. rubles (in the end of 2007 it amounted to 2,6 billion rubles). However, things went on another way – in the last year with the commodities output increased almost by 10% (23,2 bln. rubles) the enterprise got net losses in the amount of 2,8 bln. rubles. This year hasn’t brought relief – according to the results of the I quarter KOS had another 2,6 bln. rubles of net losses. This caused concerns not only among the principal lenders of KOS – Raiffaisen Bank, ING, Sberbank, Vneshtorgbank and Vneshekonombank, but also among the holders of Eurobonds of “Kazanorgsintez” to the amount of 200 mln. rubles. As a result, the last ones were kept from taking rash decisions, and Igor Shuvalov promised to conduct a “proper work” with the first ones.
The terms are still to be defined. Provision of state guarantees for the current year, which is one of the main conditions of granting of large credits by state banks, is due on November 1. Thus “Kazanorgsintez” and “TAIF” have only one week left in order to settle the issue of KOS’s debt restructuring by the means of the funds of Sberbank. Earlier TAIF suggested to all the creditors to spread the payments over eight years and raise, however, the interest rate up to 14% per annum. The conditions, under which 1 bln. dollars will be granted by Sberbank to “Kazanorgsintez”, are to be known in the beginning of November.
 
 
 

 

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