Monday, March 23, 2009

Russian billionaire bailout...will it work?


Read this Reuters report to see if you think this plan will work...


Thomson Reuters

MOSCOW, March 23 (Reuters) - Billionaire Mikhail Prokhorov, Russia's richest man, has offered to bail out indebted financial news provider RBC, investment bank Renaissance Capital said on Monday, boosting the media firm's stock over 30 percent.
Renaissance Capital, half-owned by Prokhorov, said it was proposing upping the share capital at RBC. The mining tycoon's Onexim investment group would buy 65 percent of the new share capital for $35 million, the bank said in a statement.
'Such a decision will not only save the business of RBC and regain the trust of advertisers, partners and employees, but also create new opportunities for the development of the company during the crisis,' said Ruben Aganbegyan, chief executive of Renaissance Capital in Russia.
RBC declined to comment on the proposal.
Renaissance Capital said the $35 million would finance operations and partial repayment of debts. A source close to RBC, who declined to be identified, estimated the company's total debt at between $200 million and $230 million.
At Friday's close, RBC's market capitalisation was about $52 million. RBC shares, which have been creeping up in recent days, soared 31.3 percent on Monday to 16.58 roubles.
Renaissance Capital said that, under its plan, creditors would be offered a three-part settlement. First, all creditors would simultaneously receive 8 percent of the total sum of their debt in cash.
They could then choose to write off 65 percent of RBC's debt with the remainder to be repaid in three years, or write off 45 percent with the remainder to be repaid in seven years.
Third, all creditors would receive a proportional stake of the company's new share capital. The total share to be held by creditors would be 10 percent of the new share capital.
Rosbank, another financial institution owned by Prokhorov, already owns 12 percent of RBC.
Prokhorov secured his place at the top of Russia's rich list by selling real estate interests and a quarter of Norilsk Nickel before the financial crisis took hold.
RBC must repay a 1.5 billion rouble ($45.05 million) bond with a $5 million coupon payment on Tuesday. Another RBC bond issue was trading at an average price of 15 percent of face value on Monday. It rose to 21 percent on the news.
(Reporting by Melissa Akin, Anton Doroshev and Olga Popova; Editing by Andrew Macdonald)
($1=33.30 Rouble) Keywords: RUSSIA RBC/RESCUE
(melissa.akin@reuters.com; +7 495 775 1242)
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1 comment:

  1. I'm sorry to hear you have had such a bad experience with the RBC. It's good to know you are trying to make your voice heard.

    ReplyDelete