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. Last Updated: 07/27/2016

VEB Prolongs $10Bln in Foreign Currency Loans

VEB will prolong $10 billion in foreign currency loans to all six companies that borrowed from it in 2008, the bank's head, Vladimir Dmitriyev, said Thursday.

The state decided to prolong the loans because many of the companies are in the process of restructuring their foreign debt, Dmitriyev said.

"The government's decision will affect the position taken by these foreign creditors on the company' debt restructuring," he said. The terms of some loans have been changed, Dmitriyev said, without elaborating.

VEB, which holds a blocking stake in Vimpelcom as loan collateral, will agree to its merger with Kyivstar, Dmitriyev said.

"We do not have any other options [but to agree], those are good companies," he said.

Altimo, a major shareholder in Vimpelcom, and Telenor announced earlier this week their plans to merge Vimpelcom and Kyivstar and create a leading emerging markets' mobile operator.

VEB lent out about $10 billion to six Russian borrowers: Gazpromneft, Evraz, PIK Group, Sitronics, Altimo and RusAl.

VEB's supervisory board, chaired by Prime Minister Vladimir Putin, approved loan extensions for all six firm,s but the terms on some loans have been changed, Dmitriyev said, without elaborating.

The companies borrowed from VEB in order to refinance outstanding debt when the global financial crisis effectively shut international capital markets for Russian firms.

"We think some borrowers can service and pay their loans back [without VEB's loans extension] ... Anyway, there will be no write-offs on those loans," Putin told VEB's supervisory board.

Analysts applauded the move, saying it clears up many of the debt issues that clouded companies' prospects.

"This comes as highly positive news, as this move ultimately rids all the uncertainty regarding numerous companies’ 2009 short-term debt refinancing issues," VTB capital said Friday in a research note.

(Reuters, MT)