VEB head Vladimir Dmitriev has already announced that there are applications in the bank for a sum that exceeds that amount. He estimated the total amount requested at $120 billion.
Photo: Denis Kurilenko
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VEB Develops Hand over Fist
Russian Prime Minister Vladimir Putin and the supervisory board of Vneshekonombank – Development Bank have approved the criteria for the crediting of companies using the $50 billion allocated by the government to refinanced Russian foreign debt under the recently passed law “On Additional Measures to Support the Financial System of the Russian Federation.” It is clear from the published criteria that the bank will mainly help state companies, for which the super-strict requirements are more manageable.
VEB head Vladimir Dmitriev has already announced that there are applications in the bank for a sum that exceeds that amount. He estimated the total amount requested at $120 billion. Thirty-five corporate clients and 20 banks have filed applications. The applications will be processed within 18 days. The criteria for the loans, which will have a maximum amount of $2.5 billion, are that the borrower’s main activities be carried out in the Russian Federation, and in the “real sector,” that only credit taken “to implement investment projects or acquire assets in Russia” will be refinanced and that the project “have importance for a region or strategic sector.” Furthermore, the loan should have co-financing “when possible.”
In the final version of the text, it is specified that the refusal of the loan should lead to a threat to the economic security of the country. That is defined as loss of significant assets, loss of jobs or full closure. Co-financing is mandatory “in the size of no less than 25 percent of the refinanced debt to the foreign bank, which can include the funds of the borrowers’ shareholders and/or other creditors.” Special purpose vehicles are included for consideration.
Borrowing companies have to agree to use their own receipts from export contracts as well as those of “other participants in the deal” as collateral for the loans. They must also receive the bank’s approval before taking out other loans (including the issuance of securities) or before alienating assets worth over 10 percent of the company’s value. A bank representative must be placed on the company’s board of directors and the company cannot have tax arrears. In addition, companies must agree to provide the bank the “right to direct debiting of funds from any of the borrower’s accounts at the discretion of the bank to meet obligations as part of the credit deal.”
www.kommersant.com
All the Article in Russian as of Oct. 14, 2008
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