VTB at the end of last year refinanced the loan of the Independent Oil and Gas Company (NOC) Eduard Khudainatov, said a man close to the NOC, two employees of the company's creditors and a person who knows the terms of the restructuring. All of them say that the NOC in the next two years will not pay interest for using the loan. Three interlocutors note that this applies to the body of debt: according to two of them, this is 230 billion rubles. ($ 4.1 billion at current rates), the third says about $ 4 billion. The loan was attracted in 2014 to buy Alliance Oil (the deal was not disclosed).
"We did provide loans to NOCs when it bought Alliance Oil from Musa Bazhaev," said Andrey Kostin, Chairman of the Board of VTB, adding that now it is a matter of restructuring the loan. "We work with the company." The representative of the bank did not discuss the terms: "We do not comment on client information" and stressed that now "the company has no outstanding obligations to VTB" on loans.
The representative of NOC could not be contacted. Interest, she paid regularly, says another interlocutor, close to the creditor NOC.
The bank manager of the top 10 calls such a two-year vacation "a very, very rare" case. "It happens that if the bank believes in the business model of the company," says the state banker, specifying that in his portfolio of distressed debts, only 1% have such conditions. "Perhaps VTB has nowhere to go, except how to transfer payments," he argues.
Such a transaction is an exceptional case, commented the financier, who was in the leadership of several banks from the top 20. "Do not underestimate the bank. The terms of the transaction could include partial conversion of debt into shares, increase of collateral or one-time payments, as well as tightening of covenants or additional conditions for repayment of debt. For example, a company must send all the earned money over a certain amount on accounts to repay, "he argues. "This restructuring of banks are only if the company has a meager cash flow. Two years is quite a long time. But the bank could do this if it has sufficient collateral, and also if he understands that the financial model of the company will allow paying the debt later, "another top manager of a large bank said.
How many NOC and its companies should VTB, what is their debt load, is not known. The debt of Alliance Oil (controlled by 26% of NOCs) is $ 2 billion, in the next two years it should return $ 1.3 billion to banks, of which $ 262 million is interest, it follows from its accounts. After the deal with NOC, Alliance Alliance's debt load in 2015 multiply increased to 5.23 EBITDA. By October 2017, it fell to 4.45 EBITDA.
The main issue is how the agreements between VTB and NOC have been re-arranged, Kirill Lukashuk, analyst of ACRA, comments: "VTB has restructured the debt, reclassification is very likely, additional reserves are added - this development is not ruled out either by Russian standards or by IFRS. At the same time, the result on reserves will largely depend on the collateral and the new structure of cash flows. " In the oil and gas sector, such restructuring is rare, although for development projects such situations are not uncommon, he points out.
Typically, banks offer restructuring, in which interest is paid in part and partly capitalized and paid when it is redeemed, says Andrei Polischuk, an analyst at Raiffeisenbank, but two years is a short time so that you can get even with a big debt.
To reduce the debt load a year ago Khudainatov considered the possibility of selling a stake in NOC, people who were close to potential buyers, an official and a company counterpart told. "VTB is interested in expanding the number of NOC shareholders, especially if they can attract new money, know-how, or markets," Kostin said at the time (quoted by RBC). Interest in the NOC Arab funds and Chinese companies, people who were close to NOCs and its counterparts told, but before the deal did not come.
The new plan is to attract investors to the development project of the Payah oil field. Hudainatov estimated it at $ 5.8 billion, and it was ready to part with 50% - provided that new partners will also invest in the development of the field. To get the first industrial oil, it needs to invest another $ 5 billion, Hudainatov said. The project was interested in the Chinese CEFC, which will soon close the deal to buy 14.16% of Rosneft for $ 9.1 billion, people close to NOC and its counterparts told.