the end of the year the company must pay $ 63 million syndicated loan and $ 7 million debt on the Euro-bonds

owner of the company Ukr-Avto (controls the Zaporizhia Automobile Plant) Tariel Vasadze driving age of 12. Children's fascination with his father's car GAZ-69 (in common parlance Mutt) is largely determined his fate. However, the key to success in life graduate of the Kiev Institute of the road was not the ability to steer, and the ability to attract loans. Their impact on the business Vasadze not be overemphasized. First, thanks to loan state Ukreksimbanka entrepreneur was able to purchase your key asset - Zaporozhye Automobile Plant. Secondly, through bond issues, as well as syndicates of investment banking he has retarded the company to stay afloat.

When in May this year, the main competitor ZAZ - Bogdan Corporation - had to negotiate with creditors and begin the process of restructuring its debt, it seemed that the strength of Cossacks enough to avoid a similar fate. However, the financial results of the first half showed that the total credit outstanding has exceeded the six-month revenue ZAZ, and the ratio of debt to the company of his own capital according to experts has grown to 116%. Given the significant growth in the automobile market in Ukraine is not observed, Tariel Vasadze certainly have to negotiate with creditors and to demonstrate that he is able to negotiate not only with Ukrainian officials and Western bankers.

Loans under Lanos

While the flagship of Russia's automobile industry concern AvtoVAZ declares the whole world that was on the verge of bankruptcy, at the Zaporozhye Automobile Plant silence and tranquility. Information on its debt obligations and creditors of the company does not provide. Usually such secrecy about anything is not good evidence. After all, Cossacks, as Samartsev, have a rich history of credit events, which resulted in the accumulation of debts.

In 2003, ZAZ first decided to issue three series of bonds totaling $ 150 million UAH. The money was needed for the organization MKD assembly of Opel, and since early 2004 - Lanos. Bonds managed to successfully place at 14% per annum through the bank Aval.

Subsequently

net profit Automobile grew exponentially, prompting managers to the implementation of new large-scale projects. For example, in early 2006, ZAZ announced his intention to invest in the development of production and commodity network 768.5 million UAH. In addition, it became aware of the joint plans of the corporation Bogdan and ZAZ to build car assembly complex in Nizhny Novgorod region in Russia. The total project budget is estimated at $ 700 millionshare of Cossacks, as well as the source of funds is not disclosed, but is unlikely strategy ZAZ differ greatly from Bogdan, who invested in the project only 15-20% of its own funds, while the rest was credits.

Nizhegorodskiye interests ZAZ attract the attention of Russian venture banks, and a car factory being established with the active cooperation. Already in July 2006, Moscow's MDM Bank provides a Ukrainian enterprise to a large loan of $ 75 million at favorable 8,5% full-time equivalent. Already half a year later the same financial institution with the participation of Bank VTB Capital and HSBC had hosted accommodation ZAZom evroob bonds are worth $ 125 million third issue was purchased by private commercial banks, and the rest - Western hedge funds and investment banks. Internet Agency Сbonds leads interesting geographical statistics of the holders of Eurobonds ZAZ: Europe - 46%, Asia - 39%, Russia - 15%.

Having successful experience placement, management of car factory in January 2007, announced the launch of four new series D - G at 600 mn. The organizer of the next issue was to be Brokbusinessbank, but a month Zaporozhye automobile plant halted the issuance of bonds and the prospectus. Officially, this decision was due to a change in current policy borrowing.

new stage ZAZ credit history has been the engagement of two syndicated loans in 2008. Successfully repaid $ 83.3 million for the three-month short-term loan syndicate Calyon and ING Bank NV, the company in December received another $ 62.5 million (LIBOR 5%) in the longer term - one year. A key objective of the current loan was refinanced debt. It should be noted that Western bankers are not very trust the borrower, since ZAZ intended to attract a lot more money and under the best conditions. For example, in September the company announced a desire to get a loan size of $ 125 million to 2,5 years with Libor 3,75% per annum. In summer 2008, ZAZ redemption of a significant portion of outstanding Eurobond loan in the form of credit notes CLN worth $ 117.8 million repayment of bonds was very timely, because under the original terms of placement advancing maturity date in December 2009. In this case, Zazu now had to be prepared to pay creditors about $ 200 million Given the current recession, to find that kind of money would be very difficult.

at low speed

Tariel Vasadze now consider the main lobbyist for the state support the domestic automobile industry. He immediately insisted on imposing duties on imported cars, and also stated the need for direct state aid automotive industry. I do not rule out bankruptcy, because Ukraine lacks the necessary stabilization fund, even for a strategically important enterprises, - stated the president of UkrAVTO in the midst of the crisis. Burdened with loans to owners ZAZ really saving business had to use all possible anti-crisis measures, and the strategic status of the company was very helpful.

In November last year, domestic car market has collapsed and has since been signs of significant recovery was not demonstrated. 2008 Zaporizhia Automobile Building Plant even finished with a loss of 390 million UAH. According to the analyst of investment company Concorde Capital Yegor Samusenko, for the first half 2009 net profit of CJSC ZAZ amounted to UAH 21 million., EBITDA - 145 million UAH. And interest payments - 99 million grn.

According to the company Ukr-Avto in November ZAZ would pay $ 7 million debt on the Eurobond loan. But this is only part of the problem. According to the agency Сbonds, in November deadline for the syndicated loan Calyon and ING Bank NV of $ 62.5 million press office ZAZ information on how to service the loan and whether the negotiations are conducted on its restructuring, has not provided. Given that credit conditions attract not disclosed, experts on the credit situation has not yet possess.

IR Foyil Securities analyst Ruslan Patlavsky believes that if the company is not able to negotiate with creditors on restructuring, then the probability of default remains high. According to our calculations, the ratio of debt /equity capital of CJSC ZAZ was 100% at the end of 2008, and this year this figure increased to 116%, - said Ruslan Patlavsky. At the same time, the level of financial debt is lower than the main competitor of UkrAVTO - Bogdan Corporation, whose ratio of debt /shareholders' equity at the end of this year, as calculated by the IR Foyil Securities, should reach 140%.

Head of Research Department IG Socrates Konstantin Stepanov believes that the most likely ZAZ already in talks to restructure its debts. The expert also pointed out that in case of failure, additional funds for debt repayment may be brought against a corporation UkrAVTO, which in the first six months of retained earnings.

still Tariel Vasadze showed a master class to attract profitable loans. His secret was very simple. To get overseas cheap loans or even any money, need for their own positive credit history - says Vasadze. ZAZ impeccable credit history is under threat, and to rely on loans in the future, the businessman will have to razrulivat the situation with precision driver Formula 1. Otherwise ZAZ expects unenviable fate Zhiguli.

Igor Goshovsky

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