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. Last Updated: 07/27/2016

KamAZ to Swap Debt For Equity




Russian truck maker KamAZ is finalizing a restructuring plan that will change its top management and allow foreign creditors to swap debt for equity, a spokesman said Friday.


KamAZ spokesman Nayil Galiullin said the Tatarstan-based company was finishing a plan for major creditors to take equity stakes and instill new life into the firm.


It plans to form a new board that will include representatives of the creditors who are owed some 7 billion rubles ($1.2 billion).


"Owners will put up their candidates based on projected investment in KamAZ, from the conversion of the debts they hold into share capital," Galiullin said.


A number of banks, including the European Bank for Reconstruction and Development and Russia's Vneshtorgbank, have signed on to the conversion scheme put forward by U.S. investor Kohlberg Kravis Roberts & Co.


Russian natural gas monopoly Gazprom said it would also exchange debt for a stake in KamAZ.


Galiullin said the new board would have seven members representing Tatarstan, six from the Russian government, four from creditor banks, two from KKR and another four from other shareholders.


Elections will be held at the next annual meeting, a date for which has yet to be set. Top management, including a new KamAZ director and deputies, will be chosen on a competitive basis, Galiullin said.


"It will be extremely serious -- we will not limit candidates to those from Tatarstan and Russia," he said. "That is our answer to the demands of several foreign banks."


KKR controls about 26 percent of KamAZ, though its holding will drop to about 16 percent after the restructuring.