Daily analyst comments
GAZ Group to reschedule almost 100% of debts
02.07.09 10:13
News that almost all lending banks have agreed to restructure GAZ Group’s debts should help improve the car manufacturer’s credit standing. At the same time, Alfa Bank’s refusal to reschedule GAZ’s debt may exert a negative impact on the company. Given GAZ Group’s social significance, the company is unlikely to go bankrupt.
On July 1, GAZ Group board chairman, Sergei Zanozin, said that all lending banks had agreed to restructure company’s debts, except for Alfa Bank, which had claimed RUB 1.55 billion, or USD 50 million from the group. GAZ Group’s debts are to be restructured according to the following scheme: the company is to start paying interest in 6 months and the principal debt in 24 months.
We are moderately upbeat on this news. However, Alfa-Bank’s position could delay the debt restructuring process and negatively affect its efficiency. GAZ Group’s debt as of late 1Q 2009 totaled RUB 45 billion, or nearly USD 1.4 billion; therefore, Alfa-Bank has claimed about 3.4% of the company’s overall debt. GAZ Group, in turn, is set to file counterclaims in order to protract the court proceedings. We also note that the credit guarantee mechanism recently introduced by the Russian Government could help speed up the restructuring process.
In our opinion, all lenders should win from the restructuring of GAZ Group’s debts, as, if the company goes bankrupt, the money raised from the sale of its assets would not suffice to cover all of its liabilities to lending banks. Given the company’s social significance, we believe that GAZ Group is unlikely to go bankrupt.
The fair value of GAZ Group (RTS: GAZA) is USD 20.20 per share.