State Will Let Foreign Lenders Seize Assets
Russian firms unable to repay debts to foreign lenders may have to surrender stakes to their creditors, First Deputy Prime Minister Igor Shuvalov said Friday, leaving indebted billionaires to fend for themselves.
Shuvalov said only a few Russian companies were off-limits to foreign shareholders and that the authority would take a "friendly approach" to Western creditors seeking stakes in companies that owe them money.
"Some Russian investors have taken on such high debt levels that they have suffered injuries not compatible with life," Shuvalov told a news briefing.
Russia's once-mighty billionaires, who took on huge debts to fund growth when money was cheap, must repay $130 billion in corporate debt this year, a challenge that has grown tougher since the Kremlin halted bailouts to plug its budget deficit.
Shuvalov, one of two first deputies to Prime Minister Vladimir Putin, said Western creditors were more likely to want their debts repaid than to acquire stakes in ailing Russian businesses.
"They do not want to acquire assets, because it is extremely dangerous at the moment," he said. "No one needs assets at the moment, because they are worth nothing."
But he said the superintendence would study any applications by global lenders to convert their debts into equity.
"If we don't like it, we will explain why. The list of [strategic] enterprises for which we are ready to fight is very limited. We are talking about only a few, not dozens."
The country, tackling a five-year peak in jobless rates as it heads into its first recession in a decade, has pledged more resources to social support and, analysts say, is less willing to support those who accumulated fabulous wealth in boom years.
Shuvalov said the administration had no plans to nationalize United Company RusAl, the aluminum giant controlled by Oleg Deripaska, which has debts of about $14 billion.
"If we were to nationalize it, can you imagine how many applications we would get tomorrow?" Shuvalov said, referring to other companies who might ask to be nationalized.
"[Russian businessmen] are doing fine as far as their private lives are concerned. They have earned good money in the past few years and have spent well on their families," he said.
"Now, they would get rid of a bad asset and buy new ones in a couple of years? No, that would be an overly easy situation. ... We hope they will continue to work and pay debts back."
Shuvalov said he would oppose extending VEB's $4.5 billion loan to RusAl -- used partly to acquire its stake in Norilsk Nickel -- for another year when the facility expires in October.
He said the company could either refinance this loan at Russian commercial banks or find new shareholders.
Shuvalov also urged foreign investors not to be afraid of Russian courts. He said the most important cases would be reviewed by the Supreme Arbitration Court, which he said was free of corruption.
Shuvalov said only a few Russian companies were off-limits to foreign shareholders and that the authority would take a "friendly approach" to Western creditors seeking stakes in companies that owe them money.
"Some Russian investors have taken on such high debt levels that they have suffered injuries not compatible with life," Shuvalov told a news briefing.
Russia's once-mighty billionaires, who took on huge debts to fund growth when money was cheap, must repay $130 billion in corporate debt this year, a challenge that has grown tougher since the Kremlin halted bailouts to plug its budget deficit.
Shuvalov, one of two first deputies to Prime Minister Vladimir Putin, said Western creditors were more likely to want their debts repaid than to acquire stakes in ailing Russian businesses.
"They do not want to acquire assets, because it is extremely dangerous at the moment," he said. "No one needs assets at the moment, because they are worth nothing."
But he said the superintendence would study any applications by global lenders to convert their debts into equity.
"If we don't like it, we will explain why. The list of [strategic] enterprises for which we are ready to fight is very limited. We are talking about only a few, not dozens."
The country, tackling a five-year peak in jobless rates as it heads into its first recession in a decade, has pledged more resources to social support and, analysts say, is less willing to support those who accumulated fabulous wealth in boom years.
Shuvalov said the administration had no plans to nationalize United Company RusAl, the aluminum giant controlled by Oleg Deripaska, which has debts of about $14 billion.
"If we were to nationalize it, can you imagine how many applications we would get tomorrow?" Shuvalov said, referring to other companies who might ask to be nationalized.
"[Russian businessmen] are doing fine as far as their private lives are concerned. They have earned good money in the past few years and have spent well on their families," he said.
"Now, they would get rid of a bad asset and buy new ones in a couple of years? No, that would be an overly easy situation. ... We hope they will continue to work and pay debts back."
Shuvalov said he would oppose extending VEB's $4.5 billion loan to RusAl -- used partly to acquire its stake in Norilsk Nickel -- for another year when the facility expires in October.
He said the company could either refinance this loan at Russian commercial banks or find new shareholders.
Shuvalov also urged foreign investors not to be afraid of Russian courts. He said the most important cases would be reviewed by the Supreme Arbitration Court, which he said was free of corruption.
