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. Last Updated: 07/27/2016

Perekryostok to Borrow Up to $100M

Perekryostok, a supermarket chain that expects sales of $700 million next year, may sign a syndicated loan from Western banks for as much as $100 million as it seeks to open more stores, the company said.

Perekryostok plans to borrow from between $50 million and $100 million from several Western banks to nearly double the number of stores over the next three years, chief financial officer Vitaly Podolsky said at a conference.

The loan would have a maturity of two to three years, he said. He did not name which banks would take part in the syndication.

Russian supermarket chains including Perekryostok, Pyaterochka and Sedmoi Kontinent and foreign chains like Metro are expanding as the economy grows 6.6 percent and salaries increase by a quarter in U.S. dollar terms, giving individuals more money to buy food and goods.

"The main driver of supermarket expansion is the rise in salaries, making products more affordable," said Andrei Ivanov, an analyst at Troika Dialog. "Also, Russians more and more are changing their style of consumption, choosing the organized format of Western-style supermarkets."

Moscow supermarkets account for as much as 18 percent of total food retail turnover compared with about 5 percent in 2000, Ivanov said.

Perekryostok, which is 80 percent owned by Alfa Bank, Russia's largest private banking group, plans to invest about $200 million over the next three years in part to open new stores, Podolsky said . Perekryostok, which opened 14 stores this year boosting the total of outlets to 60, plans to open at least another 50 supermarkets over the next three years, spokesman Yevgeny Shidyayev said.

Perekryostok on Tuesday announced it bought a controlling stake in SPAR Middle Volga, which owns seven supermarkets in the Volga region. Perekryostok paid $20 million for a 75 percent stake, Vedomosti said, citing unidentified people close to the deal.

The purchase will help Perekryostok boost sales to $700 million in 2004 from $450 million this year, general director Alexander Kosyanenko said.

Perekryostok plans to receive a credit rating next year before a possible Eurobond sale in 2005, said Podolski. The company, which sold a 7.7 percent stake to Templeton Strategic Emerging Markets Fund in April, may consider selling additional stakes to other funds, he said.

Perekryostok will post a net income of about $12.5 million in 2003, Podolsky said.