The State Food and Grain Corporation (SFGC), which entered into a state of default, proposed to restructure the Chinese loan and raise a new loan for $700 million, Economic Pravda writes, citing information in the presentation of the SFGC, which is at the disposal of the editors.
The document is dated October 2021.
According to the document, the SCPC proposed to the Chinese side to extend for 10 years – until 2037 – the loan agreement with the Eximbank of China, concluded in 2012 for $1.5 billion (only $600 million was returned).
The state corporation proposed to pay interest on the loan for the period 2022-2025 in 2037, reduce the loan rate to 3% decoupled from Libor (under current conditions, the rate is 4.5% + six months Libor) and change the loan agreement to raise funds outside loan agreement.
It was also proposed to attract additional funds in the amount of $700 million with a phased withdrawal: $250 million to ensure trade, $150 million to upgrade capacities to increase exports, $300 million to form a land bank.
“The main goal of additional financing is: to create a competitive full-cycle state-owned grain trader on the basis of the State Grain Plant, the existence of which will provide an opportunity to generate sufficient profit, which will allow paying off loans in full without disclosing state guarantees,” the presentation said.
Until the end of last week, the SFGC had to pay $95 million of the next tranche of the loan to the Chinese Eximbank. According to the People’s Deputy from the Servant of the People Maryan Zabolotsky, the state corporation does not have such funds and bankruptcy awaits it.