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 |  Subject: First government bailouts awarded to incompetent Russian oligarch peasants  Thu Oct 30, 2008 7:41 pm | |
| MOSCOW: Companies belonging to two of Russia's richest men are among the first to be awarded loans from a $50 billion government bailout fund intended to help Russian companies repay debts to Western banks, rather than allow the banks to seize assets that had been pledged as collateral.
The plan is integral to Russia's overall $200 billion bailout package. In keeping with a strong nationalist bent in Russian business policy, a stated goal is to send the aid quickest to those companies at risk of foreign takeovers during the financial crisis.
The result will likely be payouts to already wealthy Russians, though with strings attached.
Under the bailout plan, the money is channeled through the state development bank, VEB, whose chairman is Prime Minister Vladimir Putin. The fate of many of Russia's businesses will pivot around this bank's decisions in coming weeks.
In the largest loan to come to light so far, Rusal, the aluminum and mining branch of Oleg Deripaska's holding company, Basic Element, was awarded $4.5 billion to repay a syndicate of Western banks, the news agency Interfax reported.
It was an important break from the government for a man who has had many of them in his career; without the loan, Deripaska, who is seen as a close ally of Putin, could have been compelled to surrender the 25 percent of Norilsk Nickel, the company that he had reportedly put up as collateral. The loan had partly financed the purchase of those shares in April.
A Basic Element spokesman said he could not comment until after VEB announced its lending decisions.
Separately, the billionaire partners in Alfa Group, an investment company, were given a $2 billion letter of credit from VEB that rescued the company's most valuable telecommunications asset, VimpelCom, which is listed on the New York Stock Exchange and operates under the Beeline brand in Russia.
By Friday, shares pledged as collateral for a loan from Deutsche Bank had fallen below the triggers for margin calls, and the bank could have seized the more than 40 percent stake in VimpelCom, which is owned by Altimo, Alfa's telecommunications arm.
Buying the owners time, a court in the Siberian city of Omsk froze Altimo's shares in VimpelCom on Monday in an unrelated case. By Tuesday, the loan guarantee was in place and the court on Wednesday released the shares.
"They were minutes away," from losing the company, a Western European executive with knowledge of Alfa's business said. The executive did not want to be named discussing confidential business matters.
By Thursday, VEB had awarded about $10 billion of the $50 billion bailout package, according to authorities, though the recipients had not been formally identified.
The Alfa group, led by four men on Russia's Forbes magazine list of the country's wealthiest individuals, may be among the larger recipients as their other businesses are in line for state bailouts, too.
Deputy Prime Minister Igor Sechin said energy companies including TNK-BP, partly owned by Alfa, would receive $9 billion in funding to help refinance Western bank debt. The group owns the X5 grocery store chain, also seen as likely to get a state loan.
How long Russia's oil revenue will support this level of financing for oligarchic business structures, while also propping up the ruble and maintaining welfare spending, is unclear. By Thursday, the central bank's currency reserves declined by $31 billion in one week, to total $484 billion.
http://www.iht.com/articles/2008/10/30/business/ruble.php |
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