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. Last Updated: 07/27/2016

VEB Explores Options for Terminal D

VedomostiSheremetyevo’s Terminal D is majority owned by Aeroflot, while VTB and VEB have 22.2 percent and 25 percent.

Sheremetyevo's Terminal D will be managed along with the rest of the airport after Vneshekonombank picks the operator and develops a business model for the airport, VEB chief Vladimir Dmitriyev said Wednesday.

The new branch of the airport is owned by Terminal, a company controlled by VEB and Aeroflot. Terminal is unlikely to be able to pay the $100 million per year it needs to service its $1.2 billion debt to VEB, forcing the state-owned bank to come up with a plan for future development, Kommersant reported Wednesday.

The government is therefore looking at two options to avoid Terminal's imminent default. One option would see Terminal becoming a subsidiary of Sheremetyevo after the airport acquires a stake of 50 percent plus one share in an additional share issue. The other option would require converting Terminal's debt into equity and transferring Terminal D to Sheremetyevo. Terminal stakeholders would then get a stake in Sheremetyevo in return, the paper reported.

Aeroflot's stock gained 4.4 percent on the news that the airline might sell or decrease its stake in the new terminal. "[Either of the options] would significantly decrease Aeroflot's debt burden," VTB Capital analyst Yelena Sakhnova said in a note Wednesday morning. The construction of the terminal has exceeded $1 billion already and contributed significantly to Aeroflot's debt of $1.6 billion, the note said.

Dmitriyev offered few clues to which option the bank would pick on Wednesday, saying it was not yet clear whether VEB would become a stakeholder in Sheremetyevo.

The company Terminal is 22.2 percent owned by VEB and 52.8 percent owned by Aeroflot, while VTB holds a stake of 25 percent plus one share.