OREANDA-NEWS. March 04, 2010. GAZ Group completed restructuring of its RUR 39.3 billion bank debt. The Company entered into 5-year loan agreements with banks, providing for a two-year grace period for repaying the principal and 6 months grace for interest payments. Sberbank of Russia acted as organizer of the syndicate of GAZ Group's creditor banks, while Raiffeisenbank became documentation agent, reported the press-centre of GAZ Group

State guarantees, received by GAZ Group in February 2010, amount to approximately RUR 20 billion. The state guarantees will secure 50% of the loan, the remaining part of the debt being secured by GAZ Group pledge.

Successful completion of the restructuring of GAZ Group’s debt is a unique example – both in Russian and international practice – of cooperation between the banking sector, government authorities and industry, aimed at anti-crisis recovery and further development of the real sector of economy.

Restructuring of the company's debt is a result of unprecedented work: the process of forming the syndicate of creditors, negotiating the terms and conditions and executing the documentation lasted since March 2009. The syndicate of foreign creditors changed the agreement jurisdiction from UK to Russian and converted the company's debt from foreign currency into Roubles. While preparing the restructuring the creditor banks had an opportunity to study in detail the company's prospects, to evaluate the viability of the key investment projects for which the loans had been granted. An independent audit was conducted to analyze production processes philosophy, efficiency of the quality system, management practices, technological resources, financial model parameters.

GAZ Group has met its commitments to the banks to improve business efficiency: in the second half of 2009 key enterprises of the company reached break-even operation, labor productivity rose two-fold. In 2009 company's plants cut down variable production costs on the average by 25%, work in progress – by 50%, finished products stocks – by 68%, selling costs by 51%, administrative expenses – by 48%, material inventories – by 28%.

In 2009 the company implemented a new quality system, launched the modernized GAZelle-BUSINESS LCV, continued work on the project to put into production the state-of-the-art 530 family of medium diesel engines, extended the model range of heavy-duty trucks and road construction equipment. Completion of restructuring will enable GAZ Group to carry on production modernization, renewal of the model range, improving product quality and raising its competitiveness on the automotive market.

For reference:
The consortium of GAZ Group creditors participating in the restructuring is 22 Russian and foreign banks: Savings Bank of Russia OJSC, VTB Bank OJSC, Gazprombank OJSC, ACB Absolut Bank ZAO, Alfa-Bank, Garanti Bank Moscow (ZAO), Credit Europe Bank Ltd., Bank Petrocommerce OJSC, Uralsib OJSC, UniCredit Bank ZAO, Raiffeisenbank ZAO, Barclays Bank LLC, The Royal Bank of Scotland ZAO, Banque Societe Generale Vostok JSC, OOO HSBC Bank (RR), Swedbank JSC, Commerzbank AG, Natixis, Credit Suisse Int., Erste Group Bank AG, Sumitomo Mitsui Banking Corporation Europe Limited, Nomura International plc.

Borrowers: GAZ OJSC, AZ GAZ LLC, YZDA OJSC, Avtodiesel OJSC, PAZ LLC, Russian Buses –GAZ Group LLC, AZ Ural OJSC, Trucks – GAZ Group LLC.

Guarantors: GAZ OJSC, AZ GAZ LLC, AZ Ural OJSC, PAZ LLC, Avtodiesel OJSC, YZDA OJSC, YZTA OJSC, Pavlovsky Bus OJSC, Bryansk Arsenal OJSC, TVEX OJSC, Special Vehicles – GAZ Group LLC, UMZ OJSC, TZK GAZ LLC, LiAZ LLC, Commercial Vehicles – GAZ Group LLC, TK YarDiesel LLC, GolAZ OJSC, Likinsky Bus LLC, Administrative Complex LLC, Chelyabinsk Road Construction Machines CJSC, Avtoexpo-45 OJSC.

Pledgers: GAZ OJSC, AZ GAZ LLC, AZ Ural OJSC, PAZ LLC, Avtodiesel OJSC, YZDA OJSC, YZTA OJSC, TZK GAZ LLC, Commercial Vehicles – GAZ Group LLC, LiAZ LLC, Likinsky Bus LLC, GolAZ OJSC, Administrative Complex LLC, GAZ-Reserve CJSC.

Restructuring of GAZ Group debt was conducted with participation of the Ministry of Economic Development of the Russian Federation, Ministry of Industry and Trade of the Russian Federation, Finance Ministry of the Russian Federation, Government Commission for enhancing stability of Russian economic development.

Pro-active support to the restructuring process was rendered by heads of the regions where the company operates: Governor of Nizhny Novgorod Oblast Valery Shantsev and Governor of Yaroslavl Oblast Sergey Vakhrukov.

Coordinator of the transaction: Russian Machines Corporation (core shareholder in GAZ Group).