Russian authorities, Segezha, creditors and Central Bank agree debt restructuring terms, similar decision could await ULK Group

MOSCOW. April 14 (Interfax) - A scheme for restructuring the debt of AFK Sistema's Segezha forestry holding has been agreed with its owners, creditor banks and the Central Bank, Russian Industry and Trade Minister Anton Alikhanov said during a meeting between President Vladimir Putin and cabinet ministers.

"We recently looked at a specific project, the Segezha Group of Companies, and were able to find a solution together with the creditors, with the owners of this group," he said.

It follows from what the minister said that the Segezha debt restructuring involves both restructuring and the possible participation of banks in the company's equity.

Shares in Segezha soared 9.5% immediately on the news on the Moscow Exchange to 1.66 rubles.

"We are currently planning to prepare another company for consideration - this is the ULK Group of Companies, also from the Arkhangelsk region. They have certain difficulties, a fairly big credit burden, but we hope to repeat what we've done with Segezha: both restructuring and participation, possibly in equity by banks, will be required," the minister said.

He said the scheme had been cleared with the Central Bank. "I would like to thank the Bank of Russia, they met us halfway in the Segezha case and I hope that we will be able to carry out the same work at the ULK Group of Companies," he said.

Deputy Prime Minister Alexander Novak first said the authorities were coordinating financial recovery plans for two companies in the forestry industry after a meeting of the subcommittee on sustainable economy and financial markets devoted to forestry industry issues.

Later, Interfax sources revealed the proposed terms of Segezha's debt restructuring through, in simple terms, an exchange of debt obligations to creditor banks for company shares. Segezha is conducting a share issue consisting of up to 62.76 billion shares, including pre-emptive rights, at a price of 1.8 rubles per share. It is thought that Sistema is ready to purchase shares worth up to 50 billion rubles. A similar portion of the additional issue, up to 60 billion rubles, is expected to be bought by creditor banks including Sberbank , VTB, Alfa-Bank and Credit Bank of Moscow , securing an exit guarantee in the future. To pull this off, the company and its lenders are discussing with the Central Bank a relaxation of the regulator's reserves and capital adequacy requirements for this transaction, the sources said.

Segezha's debt restructuring is being discussed, but a final decision on the form of restructuring has yet to be reached, VTB chief Andrei Kostin told Interfax last week.