Kazanorgsintez

Polyethylene manufacturer. Main shareholders: TAIF Group (53.6%), Svyazinvestneftekhimiya (28.4%). Capitalization: $133.9 million (RTS). Financial indicators (RAS, 2008): revenue: 23.5 billion rubles; loss: 2.8 billion rubles.

Kazanorgsintez most likely violated covenants on loans worth 14.2 billion rubles, the company admitted in its report for the first quarter under Russian Accounting Standards. The covenants in question were not disclosed. It was only specified that they are determined on the basis of IFRS reporting and that problems could arise due to the results of 2008 (not yet published). Negotiations are underway with creditors to change the agreements. But if an agreement cannot be reached, “significant doubts will arise regarding the ability to continue continuous operations,” the report says. After all, taking into account the problem loans, 20 billion rubles (64% of the total debt) will have to be repaid by the end of the year, the document states: 11.3 billion rubles of short-term debt, 8.7 billion rubles of long-term debt. For Kazanorgsintez, this is an unaffordable sum, believes Troika Dialog analyst Mikhail Stiskin, since it has been operating at a loss since the second quarter of 2008.

Representatives of TAIF (the company's main shareholder) and Sberbank (the main creditor) declined to comment. Representatives of Kazanorgsintez could not be reached.

Officially, Kazanorgsintez disclosed only the covenants on the five-year Eurobonds for $200 million, placed in 2006. And it is precisely these that appear to have been violated, according to Fitch analysts. One of the conditions of the loan: the debt to EBITDA ratio should not exceed six. And at the end of 2008, according to Finam, it reached 15. Another restriction: the company should not have more than $20 million in overdue debt. Kazanorgsintez was close to this in April: there were concerns about a technical default when paying the next coupon ($9.25 million), although this did not happen, notes Alexander Dodkin, head of the Zenit banking group (which owns Kazanorgsintez bonds).

In any case, Kazanorgsintez is in a pre-bankruptcy state, Stiskin is sure, and only government support (for example, loans from state banks) or a sale to an investor for a symbolic sum can save it.

Under the pressure of debt