RussNeft reduces rates

“Russneft“ is planning to repay debts in full by 2020, but the most part of them it will pay even earlier.
“Russneft“ reached an agreement with major creditors - Sberbank and Glencore - to reduce the interest rate on loans from 12 to 8%, the head of the oil company, Mikhail Gutseriev said on Friday. At the same time ”Russneft” will repay Glencore gradually: it would pay to its trader, only 3% per year, while the remaining 5% - by installments in ten years. According to the calculations of Mr. Gutseriev, by 2020 oil company will have to pay to creditors in total 12 billion dollars  - 6 billion dollars of net debt and 6 billion dollars of percent.
But the president of Russneft does not exclude the possibility that to the major creditor Sberbank, it will pay off as early as 2017.
Arrears of “Russneft” at the end of the second quarter, according to her report was 7.39 billion dollars. Principal creditor was Sberbank with 4.13 billion dollars. The company has borrowed money from it, when it was under the control of Oleg Deripaska, to whom Mr. Gutseriev had sold it in late 2006. Another major creditor is the trader Glencore, from whom the founder of  company Mikhail Gutseriev has borrowed in 2003  2 billion dollars for creation of “Russneft”. At present the company owed to Glencore 1,58 billion dollars and also 270 million dollars of them are overdue. “Russneft”  had to pay to the trader till the end of the year.
Sberbank is not yet ready to confirm the scheme of “Russneft” debt restructuring, on Friday the head of the bank, German Gref, has said that negotiations were ongoing, but the decision was not reached to. To connect with the representatives of Glencore it was not possible. In AFC “Sistema”, which owns 49% of “Russneft”, declined to comment.  According to the strategy of oil company, which will be approved in three weeks by the Board of Directors, “Russneft” is going to ramp up production, said Mr. Gutseriev. The debt restructuring will help it to save  200 million dollars annually, which it will direct for the growth of production in addition to capital costs, he added. In 2010, the oil company will invest in upstream 300 million dollars. According to Mr. Gutseriev, the rate of production growth of “Russneft” is expected to reach 800 thousand tons - 1,000,000 tons per year. Daily production of oil company has already grown on an annualized basis from 11.2 million to 13 million tons compared to the spring, when Mikhail Gutseriev had returned to Russia. In this case, the owner of “Russneft” didn’t not exclude the acquisition of upstream assets in Russia and abroad.
Analyst of IFC “Metropol” Aleksey Kokin believes that lowering of interest rates will greatly facilitate the debt burden of the company, but hardly “Russneft” should be able to let itself purchase of significant production assets until repayment of debt: it is reasonable to increase the production on the basis of available resources. According to the analyst IFD “Capital” Vitaly Kryukov, the successful repayment of the debt and increasing production depends on the management efficiency of oil companies. No one believed in the potential of |”Bashneft”, and now it is showing steady growth, "- said the expert.