Kostin reported plans to transfer bad debt of Uralvagonzavod

Defense industry loans, including Uralvagonzavod loans, will be transferred from VTB to other banks, said Andrei Kostin, VTB head. For now UVZ is supported by the state budget — the authorities decided to restructure debt of the enterprise to VTB up to 2029

VTB will transfer all Uralvagonzavod loans to Promsvyazbank and Novicombank. This was said by the head of VTB Andrei Kostin on Friday at VTB Capital’s “RUSSIA CALLING!" forum, as reported by an RBC correspondent.

Now the government is helping out with the issue of Uralvagonzavod’s debt. According to a draft budget for the next three years, loans, taken by the enterprise from VTB and secured by state guarantees, may be restructured till December 31, 2029. This regulation is provided in the budget due to a decision made on October 4, 2020, by a government commission in charge of improvement of financial positions of defense industry complex enterprises (DIC).

VTB has been accommodated with a “fundamental decision” on transfer of defense industry loans, including UVZ loans, to Promsvyazbank, said Kostin. “We have already transferred most of them, and I think there must be some sort of delay if we still haven’t”, — he said.

“But anyway, ultimately we are positive that loans of these companies will go there”, — added Kostin. Some of these credits will be transferred by VTB to Novicombank.

The loans were provided in 2016–2017, their amount was never disclosed. The SPARK database has a 2017 entry for registration of UVZ collateral with VTB, the collateral in question featured rights of claim on financial assets under a commission agency contract for $263 mn (about RUB 20 bn at current FX rate), made between UVZ and Rosoboronexport. Three more equipment collateral contracts by UVZ for VTB were registered in 2018–2019.
The authorities got to resolving the defense industry bad debt issue last year — Yuri Borisov, Vice-Prime Minister said that these loans amount to hundreds of billions of rubles. He proposed to write off RUB 600–700 bn of debt, with the total debt of RUB 2 tn, and pointed out that 90% of debt relate to several integrated corporations: United Aircraft Corporation, United Shipbuilding Corporation, High-Precision Weapons, Almaz-Antey and Uralvagonzavod. In the end of 2019 the debt issue, according to Kostin, was discussed at a meeting with President Vladimir Putin. A classified order of the President provides for “active involvement of the state budget and restructuring by leading banks”, said Kostin.

The latest available IFRS reports of UVZ (first half of 2019) state that long-term secured and unsecured bank loans of the plant amount to RUB 88 bn (repayment in 2020–2024), short-term — RUB 19,4 bn (repayment in 2019–2022).