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. Last Updated: 07/27/2016

VSM Will Get Bond Bailout




ST. PETERSBURG -- Russia's Finance Ministry will offer the VSM railway company a loan to cover payments on bonds due late last year after the two sides agree on loan collateral, a VSM official said Thursday.


"The budget credit will be granted after finalization of the collateral assessment," said Andrei Nikandrov, acting financial director of the company. "We have already reached such an agreement with the Finance Ministry."


He said VSM, which means Vysokoskorostnye Magistrali, or High-Speed Railways, owes about 435 million rubles ($20.28 million at Friday's official rate) to bond holders.


VSM missed bond payments due in September and October, although creditors have not announced default.


The company, in which the government holds a controlling stake and backs its bonds, is building a railway link between Moscow and St. Petersburg. The link is far from complete and faces high political and financial hurdles.


Nikandrov said the size of the new credit had not yet been agreed upon, but the loan was most likely to be disbursed in portions.


He said an independent valuer would assess five firms controlled by VSM holding and earmarked for use as collateral. Disagreements on the value of construction sites, also meant for the collateral, had been solved.


Nikandrov said trading in VSM bonds, suspended Jan. 13, would resume some time after the government revives its frozen securities market, slated for Friday.