OREANDA-NEWS. March 03, 2010. GAZ Group has finally restructured RUB 39.3 billion (USD 1.3 billion) worth of loans, the company reported on March 1. The company reached loan agreements with 22 banks for five years on the original terms. The company has been granted a two-year grace period on the principal debt and a six-month grace period on the interest accrued. The interest rate on the loan equals the refinancing rate + 4%. As collateral, the group has put forward its own assets and state guarantees, worth RUB 20 billion (USD 670 million).

We see the news as upbeat for GAZ Group. The loans were rescheduled on the terms announced back in the first half of 2009. Over the past year, the company could not reach a loan restructuring deal with Alfa Bank, which first sought to settle problems with other loans, issued to companies controlled by Mr. Deripaska. The threat of GAZ Group’s bankruptcy has been finally eliminated, which could have a beneficial effect on its stock valuations.

Our target price for one common share in GAZ is USD 26.6, which implies an upside potential of 5% and corresponds to a HOLD rating. Our target price per pref is USD 13.3.