Mirax Asks VEB For $200M

Developer Mirax Group has approached state lender VEB for a $200 million loan to help it refinance debt as it prepares to sell property at discount prices to avoid interruptions to its cash flows.

Mirax deputy board member Andrei Kletsko told reporters on Wednesday that the company was counting on the state to help it refinance a $200 million loan obtained from Credit Suisse and a $15 million loan received from Credit Europe Bank.

Both loans mature in February of 2009.

Kletsko also said Mirax was talking to Credit Suisse over new financing, just two months after the firm pledged not to take new loans in the next few years and use its own funds to finance development.

"Since October, there have not been any major deals. A steep decline in prices is under way," Kletsko said.

He said Mirax was ready to lower retail prices for its property by 25 percent, although discounts on offices in its flagship Moscow projects, The Federation Tower and Mirax Plaza, will not exceed 10 percent.

Last week, the company announced that it planned to auction off 20 luxury apartments in the Federation Tower to gauge consumer sentiment in a slumping market.

The apartments Mirax plans to auction probably have a market value of between $6,000 and $8,500 per square meter, although the bidding process may drive prices higher, said Anya Levitov, managing director at Moscow-based Evans Property Services.

Mirax faces total investment of $620 million in the two Moscow projects that are scheduled for commissioning at the end of 2010. In September, Mirax said it had frozen all projects on the drawing board because of problems on the financial markets but said it would carry on with existing and previously announced projects.

Mirax has $790 million of debt. In the first half of 2008, it posted revenues of $976 million and earnings before interest, taxation, depreciation and amortization of $585 million.

(Reuters, Bloomberg)