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. Last Updated: 07/27/2016

PIK Taps Sberbank to Manage Debt

MTA billboard outside PIK Group's Moscow office offering apartments for sale.
PIK Group, one of the country's largest developers, said Friday that it had asked Sberbank's investment unit to restructure its 45 billion ruble ($1.3 billion) loan portfolio, a move that analysts said could give the state bank a major role in the company's future activity.

Sberbank is one of PIK's biggest creditors, along with state banks VTB and VEB and private lenders Rosbank and Promsvyazbank, the developer said in a statement announcing the agreement. A day earlier, PIK failed to reach an agreement with VTB regarding an overdue 2.7 billion ruble loan, Kommersant reported Friday.

PIK's decision to hand over its debt negotiations, which have become a key line of business for most of Russia's developers in recent months, to Sberbank Capital represents yet another chapter in the story of a once-mighty Moscow developer that has been virtually crippled as the country's property market has come to standstill.

The developer said Wednesday that billionaire Suleiman Kerimov's Nafta-Moskva holding had bought a blocking stake of 25 percent from CEO Kirill Pisarev and chairman Yury Zhukov. Vedomosti reported on March 27 that Pisarev had been forced to hand over about 5 percent of his stake to VTB Capital in September after using shares as collateral.

A spokesperson at PIK Group said Sberbank would have no role in the developer's day-to-day operations.

Sberbank Capital general director Ashot Khachaturyants said his company would have the right to conduct negotiations and organize PIK's loan repayment structure but would not become the company's sole creditor, Vedomosti reported.

Analysts, however, said PIK was effectively taking on another partner whose influence was likely to be felt in key aspects of its business, including the sale of its assets.

"They could have a say in what properties are sold, when and at what price," said Yulia Nikulicheva, a national director at Jones Lang LaSalle's strategic consulting department.

The deal could prove advantageous to Sberbank in other ways, Nikulicheva said.

"PIK has many unfinished projects and empty lots that could now go to Sberbank," she said.

Russian developers have been among the hardest-hit in the financial crisis, with Moscow's property market coming to a near-standstill as builders have trouble financing new projects and sales of finished apartments plummet.

Last month, PIK Group said it finished only 813,000 square meters of housing in 2008, almost 50 percent less than the 1.54 million square meters it completed a year earlier.

The company's London-traded shares are down 95 percent since their high last year, many of its projects have been frozen and Pisarev and Zhukov were bumped from the most recent Forbes billionaires list.