Avtovaz to offer RUB 50 billion in bonds to state banks
Wednesday, 21 Oct 2009
Interfax cited Mr Oleg Lobanov executive vice president, finance and corporate development of Avtovaz as saying that the company is inviting state banks to buy up RUB 50 billion worth of convertible bonds and is not ruling out bankruptcy if this and other debt rescheduling measures fail.
Mr Lobanov said the company needed RUB 38 billion to restructure debt and RUB 12 billion to bolster working capital.
The company needs another RUB 42 billion on top of that for its investment program for the period 2010 to 2014 which it intends to raise on market terms.
Mr Lobanov said Avtovaz is not ruling out bankruptcy if debt restructuring fails. He said that "If the other options fail we wouldn't have any choice. He also said when asked what would happen if the company did not manage to sell the RUB 50 billion in bonds or to negotiate a settlement with the banks.”
Mr Lobanov said Bankruptcy would "not mean stopping the enterprise but protecting it from creditors.
Mr Igor Komarov president of Avtovaz said principal debt to Russian Accounting Standards was RUB 62.061 billion as of October 1st. He said this could mount to RUB 75.201 billion by the end of the year.
He said that "The principal debt as of October 1st includes a loan of RUB 25 billion loan from the state Russian Technologies Corporation and the remainder is owing to banks. Interest on the loans is 17.5% to 19%."
He added that interest payments came to RUB 770 million in October alone. The company is operating below break even, adding that 2009 output will not enable us to talk about operating profitably."
Mr Komarov said "From management point of view the most acceptable option would be to issue convertible bonds so that the enterprise is able to pay off the loans regarding the debt negotiations with Sberbank and VTB.”
But Mr Komarov said he hoped the production program would in the future enable the company to generate enough funds to service the principal debt and pay the interest. He also said the company will owe its suppliers RUB 9.05 billion as of November 1st and RUB 2.63 billion of this will be overdue. He said the company aimed to reduce the debt to suppliers to RUB 8.4 billion by January 2010.
