25th Jan 2010 09:30
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS RESTRICTED AND NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY IN THE UNITED STATES OF AMERICA
PIK GROUP ("PIK" or "the Group")
Update on Debt Restructuring
(LONDON, 25 January 2010) - PIK (LSE: PIK), a leading Russian residential developer, is pleased to provide a detailed summary of its debt restructuring.
Background
From 2004 through to 2007, PIK Group experienced strong revenue growth and followed a strategic expansion of its operations from Moscow into Russia's regions and some of the CIS countries. This growth was financed by Group cash flows, bank debt and a proportion of proceeds from the Group's IPO in 2007.
The onset of the global financial crisis in the second half of 2008 had a severe impact on the business. Consumer demand for residential apartments and consequently Group cash flows dried up. At the same time, the closure of global capital markets made it impossible to refinance the Group's short-term debt, and management therefore entered into negotiations with its creditors to agree restructuring terms.
Debt restructuring terms
As at June 30 2009, the Group's short-term debt equalled to RUB44,86bn (US$1,43bn). The Group has aimed to extend debt maturities and achieve grace periods for principal repayment as well as reducing the overall level of debt though asset disposals.
The Group has made very good progress against these objectives. In August 2009, the Group's largest creditor, Sberbank, agreed to restructure its existing debt and provide an additional RUB12,75bn (equivalent to approx. US$425MM) of funding subject to a number of condition precedents, including the receipt of government guarantees and bilateral restructuring with 80% of PIK's remaining loan facilities (excluding Vnesheconombank's facility of US$262MM). On December 9 and 16, 2009, the Group signed state guarantee agreements for up to a total of RUB 14.375bn, valid until November 21, 2014. By December 23, 2009, the Group had finalized the restructuring of 83% of the remaining debt and therefore met Sberbank's other requirements.
Asset disposals
During 2009, the Group netted out the following non-core assets against approximately RUB6,9bn of debt.
|
Description |
Type |
Estimates net sellable space, PIK share sq meters |
Book net asset value RUB in millions |
Consideration sold RUB in millions |
|
Marine Façade project |
High-end residential project in St. Petersburg |
260,705 |
2 069 |
2 361 |
|
Afanasevsky project |
High-end residential project in Moscow |
9,640 |
259 |
660 |
|
North West Towers |
Commercial project in Moscow region |
113,350 |
2 746 * |
1 761 ** |
|
PIK Nerud |
Aggregates manufacturing business |
- |
724 |
2 076 |
|
Total |
5 798 |
6 858 |
||
|
Note: (* ) NWT project was purchased through an SPV. Non-recourse project financing was used to finance this purchase. Ownership of the project is in the process of being transferred to the creditor (**) loan amount Source: Management accounts |
||||
Current debt structure
Approximately 89% of the Group's debt is secured against existing Group assets, including land plots, production facilities, sureties of Group companies and PIK shareholdings in subsidiary companies.
Group debt as of January 10 2010
|
Lender |
Currency |
Amount, RUB in billions |
As of total, % |
Maturity |
|
Sberbank (1) |
RUB |
15,84 |
42% |
1Q2012-3Q2014 |
|
Nomos Bank (2) |
USD |
7,92 |
21% |
|
|
VTB |
RUB |
3,06 |
8% |
4Q2012 |
|
Absolutbank |
RUB |
1,52 |
4% |
3Q2012-2014 |
|
Rosbank |
USD |
2,87 |
8% |
3Q2012-2015 |
|
Binbank |
RUB |
1,90 |
5% |
1Q2011 |
|
Morgan Stanley Senior Funding |
USD |
1,13 |
3% |
3Q2011-4Q2012 |
|
Nomura |
USD |
0,68 |
2% |
3Q2011-4Q2012 |
|
Others |
RUB/USD |
2,36 |
6% |
1Q2010-4Q2012 |
|
Total |
37,29 |
100% |
||
|
Note: (1) Sberbank has also committed RUB12.75bn facility towards PIK for project financing, which is excluded from the above list (2) The debt, previously held by Vnesheconombank ("VEB") was acquired by Nomos Bank in November 2009. PIK is finalizing its talks with Nomos. It is most likely that Nomos will roll the facility for another year similar to those terms that were agreed with VEB. Source: Management accounts |
||||
New Sberbank project financing
A new RUB12.75bn (equivalent to approx $430MM) facility has been committed by Sberbank to finance Group construction projects. PIK plans to draw down the loan from Sberbank during 2010 to complete existing projects and launch new developments.
Post receipt of the Sberbank funds, the Group's debt will total approximately RUB50,0bn (approx $1,67bn at a current exchange rate) of which 72,0% will be denominated in RUB. The effective average cost of USD denominated debt is 10,9%, and 15,7% for RUB debt. For 2010, interest expenses will equal approximately RUB4,6bn (including expected interest payable to Nomos) due to the reduced interest rates over grace periods agreed with a number of creditors.
Preliminary debt maturity schedule
|
Period |
Principal repayment, RUB in billions |
Total debt RUB in billions |
|
50,0 |
||
|
1H2010 |
(0,3) |
49,7 |
|
2H2010 |
(8,0) * |
41,7 |
|
2011 |
(3,2) |
38,5 |
|
2012 |
(16,1) |
22,4 |
|
2013 |
(12,1) |
10,3 |
|
2014 |
(10,0) |
0,3 |
|
2015 |
(0,3) |
0 |
|
Note: (*) As was initially agreed with VEB Source: Management accounts |
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The Group plans to issue a trading update on 2009 housing completions during the first two weeks of February 2010.
Enquiries:
PIK Group Tel: +7 495 505 97 33 ext. 1358
Viktor Szalkay
Head of Investor Relations
Citigate Dewe Rogerson Tel: +44 20 7638 9571
Tom Baldock
Lindsay Noton
Related Shares:
PIK.L