What to do with collateral
By the end of this year the government must decide what to do with “Olympic bonds”: sports and infrastructure facilities, including hotels, are built on loans from the VEB, said a source in the state Corporation and was confirmed by a source in the government.
Now consider several options, told the interlocutors . The first option is to transfer the collateral to the Federal property management Agency and VEB money for them will transfer to the Ministry of Finance. The second is to transfer the deposits into a mutual Fund (a mutual Fund) under the management of VEB, in order gradually to sell them. The third, which already offered three years ago the then Chairman of Vnesheconombank Vladimir Dmitriev, is to create special state Corporation that will take the “Olympic bonds” to itself on balance and to manage them.
Also at the end of last year, the government discussed the VEB recapitalization through Federal loan bonds (OFZ). This option is provided for the transfer of rights requirements “Olympic loans” from Vneshekonombank to the Finance Ministry. However, the Ministry of Finance has acted sharply against. According to a source close to the Ministry of Finance, the main argument was that it isn’t helping VEB capital.
“The government, in any case, I will begin to discuss the question of “Olympic liens” in the summer, after the Chairman of Vnesheconombank Sergey Gorkov will represent the Corporation’s development strategy, said a source in the government. — Too early to say that the government is inclined to any version”.
VNESHECONOMBANK participated in financing 20 projects in Sochi with a total cost of 321 billion rubles, of which 248,6 billion rubles— loans of VEB, said in the prospectus of the Corporation Eurobonds in November 2013, the VEB, has hit a repayment: at the end of 2014, the “Olympic” credits to 183 billion rubles VEB were classified as problematic. Formally they are not expired, but only thanks to a moratorium on the servicing and repayment of these loans, as extended recently till mid-2017. Without a moratorium on these loans would be officially broken, and in fact we are talking about deferred losses indicated rating Agency Fitch.
In 2012, Vladimir Putin (at that time Prime Minister, the head of VEB’s Supervisory Board) instructed the Ministry of Finance, starting in 2014 to lay the budget funds for compensation of losses of VEB for Olympic credit (the Finance Ministry has allocated VEB 10 billion in 2014). In March 2014, the VEB has asked the government to compensate the construction costs of Olympic facilities, wrote “Kommersant”, and include the limits in the budget for 2015-2017. The Corporation predicted that within a year and a half she could face a failure to perform payment obligations nine borrowers, including structures of Vladimir Potanin (in particular, the resort “Rosa Khutor”), Oleg Deripaska (main Olympic village) and Victor Vekselberg (hotel complex on 3.6 thousand rooms in the Imereti lowland).
Another VEB debtor is a company the company “the Resort plus”, which in October 2015 bought at auction the resort “Gorky Gorod” (“Gornaya Karusel”) from an affiliate with “Sberbank capital” “the holding”. “The resort plus” — the structure close to the head of the Ministry of agriculture of Russia, Alexander Tkachev, said a source close to the seller, and a source familiar with the management of “Hills city”. That the purchaser is a structure associated with Tkachev, also with reference to its sources wrote Forbes.
VEB vs Olympic investors
According to VEB for 2013, the credit “Gazprom” (“Adlerskaya” TPP) amounted to 19.5 billion rubles., the loan of the group “Renova” Victor Vekselberg – 14,4 billion rubles, loans to group “Interros” Vladimir Potanin – to 85.2 billion rubles, “Basic element” of Oleg Deripaska – 33,4 billion rubles, the Sberbank loan (now — the company “the Resort plus”) in the “Mountain carousel” – 52,2 billion rubles.
Some Olympic investors, the current situation is not satisfactory. Despite the moratorium, for example, “currently, the revenue for all transactions Basic element is fully routed VEB to repay the loan and leaves no opportunity for the investor post-Olympic development of the project”, reported the press service of the holding Oleg Deripaska.
So, completed the first phase of debt restructuring, under which it was reorganized by merging two of the Sochi project “basic element”, LLC “Port Sochi Imeretinsky” and LLC “Rogsibal”, then combining the loans. “The current amount of the consolidated debt of 22.8 billion rubles,” — said the press service of “basic element”.
According to her, restructuring options are discussed with the VEB, including reduction of rate on the loan and the ability to transfer interest payments after payment of the “body” of the debt. “Rogsibal” has the ability to absorb the amount of accumulated credit in accordance with the obligations however can not fully serve the accumulated interest payments, the educated, including due to the failure of the Bank until the end of 2015, the consent to the transactions for the sale of real estate”, — the press-service of “basic element”.
If the payments will not resume in the required amount, said a source in VEB, a creditor could take the collateral. “This will happen either by filing in the court a bankruptcy petition of borrower, or, more preferably, as a result of negotiations with them — mortgages in exchange for forgiveness of the loan or its part”, — said the source .
“Gazprom investment project”, the company “Gazprom” has no overdue debt to VEB and does not negotiate on the transfer of collateral to the Bank, reported the press service of the monopolies. Representatives of the group “Renova” and company “plus the Resort” has not responded to requests . The press service of Interros holding declined to comment.
How to evaluate the objects
The stumbling block remains the issue of assessment of Olympic venues. As suggested by the analyst of rating Agency Standard & Poor’s Victor Nikolskiy, collateral assessment, VEB will use the discounted cash flow method. It’s bringing the value of cash flows expected in the future to the valuation date. This method allows you to determine the fair value of such objects. “It seems that more reliable methods of assessment there is no market price of these facilities because it is unlikely that they are worth all of the buyers,” explained Nicholas.
According to the interlocutor in the beginning, it might be a case and on the transfer of assets at book value (loan amount net of reserves), but about earnings out of the question. In this case, said Nicholas, if VEB for the assets will receive “live” money, it will improve its liquidity. In any case, the transfer of collateral will unload the VEB balance sheet and improve capital ratios, concluded the analyst.
Press office of Vnesheconombank declined to comment. Representatives of the Ministry of Finance and the Federal property management Agency did not respond to a request .