Russian real estate company Sistema-Hals has announced that it has secured a credit facility for RUB 7 bn (EUR 197 mln) from state-controlled lender VTB and changed the terms for existing agreements with the bank. Sistema-Hals denied in mid-October that it faced any difficulty in financing its short-term debt, and said its immediate priority was financing its construction programme.

Russian real estate company Sistema-Hals has announced that it has secured a credit facility for RUB 7 bn (EUR 197 mln) from state-controlled lender VTB and changed the terms for existing agreements with the bank. Sistema-Hals denied in mid-October that it faced any difficulty in financing its short-term debt, and said its immediate priority was financing its construction programme.

The Moscow and London-listed diversified company announced on Monday that the new credit facility had a life of two years, with a drawdown period of 10 months. 'It is very important that VTB, one of Russia's largest banks, demonstrates its confidence in Sistema-Hals in the current market situation. This credit facility provides Sistema-Hals with additional source of refinancing its current debt and further project funding,' said Andrei Solovyev, chief financial officer at Sistema-Hals.

In a separate statement, Sistema-Hals said that under the new terms for its existing loans, the five-year credit facilities for the $500 mln and $200 mln granted by VTB in 2007 will be converted into roubles at the rate of the Russian Central Bank as of 2 December 2008. The credit interest rate is 15% per annum both for the $500 mln credit (the previous rate was 8.5% per annum) and for the $200 mln credit (the previous rate was LIBOR+5.43% per annum). The requirement for covenants for the financial year 2008 has been cancelled and will take effect in the financial year 2009.

Sistema, the parent company of Sistema-Hals, and its various units have pledged 75% of Sistema-Hals' stock and a stake in the Moscow Bank for Reconstruction and Development as collateral for the loans.

Sistema-Hals's core businesses is development, project management and construction, and property and facilities management in Russia and the CIS. The company has completed more than 30 projects with a total area of about 300,000 m2 since 1994. The completed schemes include the headquarters of DaimlerChrysler, the Hals Tower office building, the headquarters of Trubnaya Metallurgical Company and a hotel for the MaMaison chain (Orco Property Group).

The company is currently working on the Leningradsky Towers complex, which comprises two buildings, one of which will be Sistema's headquarters in Moscow. Cushman & Wakefield valued the Sistema-Hals share of properties and projects in its portfolio at $3.8 bn (EUR 3 bn) at end-June 2008.