Certain companies decline government support
Russian sixth-largest oil producer Tatneft says it will waive inclusion in the government list of 295 strategic companies, because the chances of getting financial assistance are small, while greater government control of its operation is inevitable.
However, the Economics Ministry does not think the company's wish will be enough to take it off the list. The government does plan to exercise tighter control of oil majors.
The companies on the list are required to submit monthly reports including 70 points. Otherwise, they would have only had to present quarterly financial reports.
Tatneft's key investment project is a major oil refinery and petrochemicals plant under construction in Nizhnekamsk, worth $3 billion-$5 billion, said deputy CEO Nail Ibragimov. However, he said, the government is not planning to provide money for business development under the strategic companies bailout program. It will only have "more serious control" of them.
The company needs long-term cheap loans to finance investment. Without the money, there is no point in submitting reports, said Konstantin Cherepanov from KIT Finance. Tatneft must have estimated additional costs of making the reports and realized there in no point remaining on the list, echoed Denis Borisov from the Solid brokerage.
Tatneft is not the only company saying it doesn't need government support. Gazprom CEO Alexei Miller also said the monopoly would rather do without it for the time being when offered support by Prime Minister Vladimir Putin a few days ago. The Gazprom source did not say whether the state giant planned to withdraw from the list.
In any case, it will not be easy. "The situation in the country largely depends on the situation in strategic companies. Therefore, government monitoring will be continued, regardless of the companies' wishes," an Economics Ministry official said.
Banks and companies haggle over financial support
16 April, 2009, 21:01
Banks want to toughen control over bad debtors, but companies are complaining the banks don't even renew loans to disciplined borrowers.
They say one good turn deserves another, but that's not the experience of some Russian corporate borrowers.
Vladimir Korzun the head of Moscow food producer, Karat, says it repaid its bank, but some lenders refused to help out again.
"We paid back Uralsib $5 million but didn't get a kopek from it again, MIB Bank also hasn't given us another loan."
And its a similar story at Russian cable maker, Sevcabel. Its struggling to pay its debts on time, and company head, Gennady Makarov, says the banks should be prepared to help firms through the hard times.
"Our bankruptcies are not profitable for banks. It takes time and money – even our equipment on collateral is not that easy to go and sell. We hope that even the most uncompromising banks will understand that their behaviour is absurd, and switch to normal partner relationships."
One of Russia's main state lenders, VTB, told president Medvedev that it has increased financing of the real sector by 8% since the beginning of the year, and on behalf of the banking sector, CEO Andrey Kostin called for stricter financial discipline by borrowers.
"It's important that debtors don't think that the crisis writes off everything. There is need to take improve legislation in this sphere."
President Medvedev agrees. The state plans to inject several billion dollars more into banking sector. Medvedev once again emphasised that the banks should pass the money on to industry. But that’s unlikely to satisfy industrialists, who say the current interest rates on loans, of around 25%, are unaffordable anyway.
Russia’s Richest Lose $380 Billion as Crisis Bites, Forbes Says
By Torrey Clark and Anastasia Ustinova
April 17 (Bloomberg) -- Russia’s 100 richest people lost 73 percent of their wealth last year as the economic crisis slashed the value of commodity and banking assets, Forbes Russia said.
“Not a single business leader in the Golden Hundred increased his fortune in the past year,” Forbes said in its annual list published today. Only 32 billionaires remain, compared with 110 in the previous year.
The value of assets held by the so-called Golden Hundred tumbled to $142 billion this year, from $522 billion last year, according to the magazine. Those who “suffered least” sold interests before the financial crisis, which has wiped 38 percent from the Micex index and 30 percent from the ruble against the dollar since Aug. 1.
Mikhail Prokhorov, 43, with a fortune of $9.5 billion, topped the list, Forbes said. In April last year, Prokhorov sold 25 percent of OAO GMK Norilsk Nickel, Russia’s biggest mining company, to Oleg Deripaska, 41, for about $7 billion in cash and 14 percent of aluminum producer United Co. Rusal.
Deripaska, the first of the billionaires to cede secured assets to banks, dropped to 10th from first place after losing an estimated $25 billion in the past year. Forbes put his fortune at $3.5 billion now.
One of eight people to join the list was Yury Bortsov, 38, who with his father sold control of the OAO Lebedyansky juice maker to PepsiCo Inc. and Pepsi Bottling Group Inc. in a $1.4 billion sale last year. Forbes rated Bortsov 71st, with $500 million.
An additional 15 businessmen returned to the list from previous years, the magazine said.
To contact the reporter on this story: Torrey Clark in Moscow at email@example.com; Anastasia Ustinova in Moscow at firstname.lastname@example.org.
Last Updated: April 17, 2009 03:28 EDT
Prokhorov Tops Forbes Russia’s Diminished List of Billionaires
By Torrey Clark
April 17 (Bloomberg) -- Mikhail Prokhorov topped Forbes Russia’s list of the country’s richest, which shrank to 32 billionaires from 110 the previous year, publisher Axel Springer AG said on its Web site.
Prokhorov’s fortune was estimated at $9.5 billion, according to the statement.
Last Updated: April 17, 2009 01:42 EDT
Novolipetsk Steel Output, Sales Rise on China Demand (Update1)
By Yuriy Humber
April 17 (Bloomberg) -- OAO Novolipetsk Steel, Russia’s biggest steelmaker by market value, increased first-quarter production and sales on reviving Chinese demand.
Output jumped 21 percent from the prior three months to 2.1 million metric tons, the Lipetsk, Russia-based company said today in a statement. Volume sales rose 3 percent on the quarter to 1.9 million tons, still down 25 percent from a year earlier.
Signs of a demand revival, supported by government spending pledges in Russia and other countries, may be undermined for most of this year by a weakening steel market. Russian prices for the metal are likely to drop by half in 2009 as sales of cars and new homes stall, UralSib Financial Corp. said in a report last month.
“In the second and third quarters, the situation will remain challenging,” Novolipetsk said. Falling steel prices in the first three months in its main markets, “coupled with low sales volumes, put downward pressure on financial results.”
Novolipetsk gained 59 kopeks, or 1.1 percent, to 56.90 rubles at 11:47 a.m. in Moscow trading, extending its four-day climb to 23 percent. The stock has almost doubled this year.
The steelmaker, controlled by billionaire Vladimir Lisin, was sending between 15 percent and 20 percent of its monthly exports to China, investor-relations chief Anton Bazulev said last month. Sales to China are likely to drop within two months after global iron-ore and coal contracts are settled, making Russian steelmakers less competitive, he said.
Novolipetsk said today it’s cutting costs and negotiating lower prices for coking coal and iron ore to compete on exports.
OAO Raspadskaya, Russia’s second-largest producer of coal used for steelmaking, said this week the average weighted price for washed coal plunged 61 percent to $47 a ton in the first quarter from the preceding three months.
To contact the reporter on this story: Yuriy Humber at email@example.com
Last Updated: April 17, 2009 03:50 EDT