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. Last Updated: 07/27/2016

Public Money Spent on Ice Stadium

ST. PETERSBURG -- Breaking pledges not to throw public money at an $84 million stadium being built in St. Petersburg to host the 2000 World Ice Hockey Championships, the city government is dipping into the public purse to bail out the site's troubled developer.

The Ice Hockey Palace, located near Prospekt Bolshevikov metro station in the city's southeast, will be one of the major venues for the 2000 World Ice Hockey Championships, which will open in St. Petersburg on April 28.

The stadium's developers, OAO Sport's Palace - set up in 1998 by the St. Petersburg government - borrowed money from three local banks: Balt-Uneximbank, Menatep-St. Petersburg and Baltiisky Bank.

Sport's Palace must pay back $15.9 million to the banks before the tournament opens - and it has already missed two deadlines.

Although the St. Petersburg government promised to underwrite Sport's Palace's debts, Governor Vladimir Yakovlev has also said several times that his administration would not spend any money on the stadium's construction.

The first deadline, for $9 million to Baltiisky Bank, passed in January, although a part of that sum has been set against profits made by the stadium, which will be owned by Sport's Palace.

But Oleg Shigayev, Baltiisky Bank chairman, said Sport's Palace is still short by about $200,000 on paying just the interest on the loan.

At a press conference last week, Shigayev said he believed the bank will get its money back.

"I have met Sport's Palace management, and they promised to pay the money back. There is no such thing as credit with an absolutely clean financial history," he said.

Baltiisky Bank will negotiate with Sport's Palace to prolong the terms of the loan, initially taken for one year with an interest rate of between 24 percent and 28 percent, Shigayev said.

Sport's Palace also looks to have missed payment on a $2.5 million payment due to Menatep-St. Petersburg last Wednesday. This loan was issued a year ago at a 20 percent interest rate.

Finally, at the end of April, Sport's Palace is due to pay a further $7.9 million to Balt-Uneximbank.

While Sport's Palace struggles to meet its dues, City Hall has been giving the enterprise a helping hand.

At the end of December last year, Yakovlev issued a decree that 60 million rubles ($2.1 million) be taken from the city's budget reserve fund to help Sport's Palace with its financial problems.

Then on Jan. 17, Yakovlev signed another decree giving Sport's Palace a 200 million ruble ($7 million) short-term credit, to be paid back by Monday.