With the crisis deepening in Russia, private companies and state corporations are looking for the way to solve their debt problems. Lucky few get the vital support from the state. We have obtained the document that might shed light on how the government help state-favoured companies to receive bailout packages.  


"Dear Sirs,"


"The government of the Russian Federation is fully aware of the meeting of the coordination committee of the United Company Rusal and its international bank creditors over the debt of Rusal. <…> We are aware of the troubles the company currently has and of the proposal to sign a standstill agreement with the bank creditors, under which the company will suspend refinancing the debt until it works out a new debt restructuring plan aimed at long-term liabilities. We are going to provide all necessary support to the plan. <…>"

"I receive full information about the progress of the negotiations. <…>"

"Hereby I confirm the intention [of the government] to provide the company with additional state support in the form of restructuring the banks’ state debt, postponing the tax payments, guaranteeing the bonds of the UC Rusal or in any other similar form". 


All creditors of the UC Rusal received this letter, signed by presidential adviser Arkady Dvorkovich, in the late autumn 2008. Rusal, as of 2009 the second largest producer of aluminium in the worl, is now a private company. In 2008 the state did not own a single share in it. Key shareholder of the company is Oleg Deripaska's En+ holding. After listing on Hong Kong Stock Exchange, Deripaska decreased his stake to 48%. Mikhail Prokhorov's ONEXIM holds 17% of the company (19% before the IPO) with Viktor Vekselberg's SUAL’s holding 16% (18% before the IPO).

Why did the company receive the state support? The reason is stated in the letter. According to Dvorkovich, the company is on the list of 295 companies, which “are integral part” of Russian economy. The government, he says, regularly watch the activities of the company and is always ready to help.

Mr Dvorkovich was unavailable for comments. Asked about the letter, he hung up the phone.

Unfortunately he is the only person in this country who knows the answer to the question whether the rest of 294 companies could expect the state support and how one could apply for it.

Dvorkovich's letter was very effective. The aluminium giant managed to sign the $16.8 billion debt restructuring agreement with foreign and Russian banks, so far one of the largest debt restructuring agreements in recent history of Russia. 


Novaya Gazeta