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As I've noted before - whether by plan or opportunism, the latest crisis is being used to squeeze the existing crop of oligarchs.
The real question is just how much of Russia's economy is dependent on the oligarch's pyramidal empires?
http://online.wsj.com/article/SB1229...fox_australian
The real question is just how much of Russia's economy is dependent on the oligarch's pyramidal empires?
http://online.wsj.com/article/SB1229...fox_australian
Mr. Deripaska, in his first interview since the global credit crunch took hold in Russia this fall, said he is peddling stakes in just about everything he owns to pay off his crushing debts. People close to Rusal, the crown jewel, say talks include Chinese as well as Western investors, who would take equity stakes in return for helping to pay down Rusal's $14 billion debt.
"Naturally the situation is difficult. If it were easy, we wouldn't have kept you waiting until midnight," the 40-year-old billionaire, his eyes tinged red with fatigue, told a visiting reporter. "We're confident there's always a reasonable solution. The question is how big the losses are." He acknowledged they would be "in the billions."
Like Russia's other industrial tycoons who flooded the world's rich lists in the past few years, Mr. Deripaska borrowed heavily to gain control over his sprawling holdings. The oligarchs, as they are known in Russia, rode surging world prices for oil, metals and other commodities to snap up assets in Russia and abroad. Now the torrent of revenue has slowed to a trickle, the rivers of easy foreign credit have dried up and the debts are coming due. As the Kremlin steps in with bailouts, many business leaders and bankers fear companies will be renationalized.
No oligarchs have revealed their finances publicly, but Russian and Western bankers say Mr. Deripaska is one of the most exposed, with billions of dollars in borrowed money against assets valued at more than $20 billion at their peak. Last month, Rusal took the single largest loan in Moscow's bailout program -- $4.5 billion -- to avoid losing a stake in a big local nickel producer to Western creditors.
Before that deal, Mr. Deripaska lost two other foreign holdings to lenders. He is in talks to sell control of his bank, as well as other assets. He says he hopes to have new investors in practically all his companies, including Rusal, by the end of March.
Mr. Deripaska wouldn't comment further on the Rusal talks, which still are preliminary and might not result in a deal. "He's talking to everyone he can," says a person close to the company. Failure could force Rusal to go directly to the Kremlin for more financing, people close to Rusal say.
As oligarchs' empires wobble, decisions about who gets to keep control of which company, and on what terms, are increasingly made by the Kremlin. Prime Minister Vladimir Putin is chairman of the state bank that has become the lender of last resort for the debt-laden tycoons, offering billions in bailouts but demanding the tycoons put up their assets as collateral. Many business leaders suspect the deals are really stealthy takeover bids.
"It's not clear this is help for the oligarchs," says Alexander Shokhin, head of Russia's main business association.
Kremlin officials deny they plan to nationalize companies they bail out.
Foreign banks, meanwhile, are in a bind. Under enormous financial pressure, they have little room to make concessions to troubled borrowers like Mr. Deripaska. In the U.K., lenders -- some now partly state-owned -- also are under political pressure not to be seen doing any favors for a foreign tycoon, especially after Mr. Deripaska was caught up in controversy this fall involving meetings he had with an official in Prime Minister Gordon Brown's government.
"Naturally the situation is difficult. If it were easy, we wouldn't have kept you waiting until midnight," the 40-year-old billionaire, his eyes tinged red with fatigue, told a visiting reporter. "We're confident there's always a reasonable solution. The question is how big the losses are." He acknowledged they would be "in the billions."
Like Russia's other industrial tycoons who flooded the world's rich lists in the past few years, Mr. Deripaska borrowed heavily to gain control over his sprawling holdings. The oligarchs, as they are known in Russia, rode surging world prices for oil, metals and other commodities to snap up assets in Russia and abroad. Now the torrent of revenue has slowed to a trickle, the rivers of easy foreign credit have dried up and the debts are coming due. As the Kremlin steps in with bailouts, many business leaders and bankers fear companies will be renationalized.
No oligarchs have revealed their finances publicly, but Russian and Western bankers say Mr. Deripaska is one of the most exposed, with billions of dollars in borrowed money against assets valued at more than $20 billion at their peak. Last month, Rusal took the single largest loan in Moscow's bailout program -- $4.5 billion -- to avoid losing a stake in a big local nickel producer to Western creditors.
Before that deal, Mr. Deripaska lost two other foreign holdings to lenders. He is in talks to sell control of his bank, as well as other assets. He says he hopes to have new investors in practically all his companies, including Rusal, by the end of March.
Mr. Deripaska wouldn't comment further on the Rusal talks, which still are preliminary and might not result in a deal. "He's talking to everyone he can," says a person close to the company. Failure could force Rusal to go directly to the Kremlin for more financing, people close to Rusal say.
As oligarchs' empires wobble, decisions about who gets to keep control of which company, and on what terms, are increasingly made by the Kremlin. Prime Minister Vladimir Putin is chairman of the state bank that has become the lender of last resort for the debt-laden tycoons, offering billions in bailouts but demanding the tycoons put up their assets as collateral. Many business leaders suspect the deals are really stealthy takeover bids.
"It's not clear this is help for the oligarchs," says Alexander Shokhin, head of Russia's main business association.
Kremlin officials deny they plan to nationalize companies they bail out.
Foreign banks, meanwhile, are in a bind. Under enormous financial pressure, they have little room to make concessions to troubled borrowers like Mr. Deripaska. In the U.K., lenders -- some now partly state-owned -- also are under political pressure not to be seen doing any favors for a foreign tycoon, especially after Mr. Deripaska was caught up in controversy this fall involving meetings he had with an official in Prime Minister Gordon Brown's government.
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