ROS » Topics » A. Defaults

This excerpt taken from the ROS 20-F filed Jun 17, 2009.

A.    Defaults

        Due to insufficiency of cash flow generated by GlobalTel from its operating activities to cover both its operating expenses and refinancing its indebtedness in full, GlobalTel was in default of payments to Loral and GlobalStar L.P. as of December 31, 2008 in the amount of RUB 1,906 million. The loan from Loral does not provide for any collateral. A penalty in the amount of RUB 94 million is included in the outstanding balance, which comprises RUB 298 million as of December 31, 2008. As of the date of this annual report, GlobalTel has not obtained waivers from Loral on the loan. In July 2006, Loral brought an action against GlobalTel claiming immediate repayment of the principal amount and penalties. In March 2007, the LCIA ruled in favor of Loral. In 2009, the Supreme Arbitration Court enforced the LCIA ruling and ordered GlobalTel to repay the loan and applicable penalties to Loral.

        GlobalTel is also in default in respect of payments of its vendor financing payable for 2004, 2005, 2006, 2007 and 2008 totaling RUB 1,608 million payable to GlobalStar L.P. for the purchase of three gateways and associated equipment. The vendor financing agreement provides for a pledge of all equipment received from GlobalStar L.P. under the agreement until all payments are made. The following table sets forth the amounts payable under the vendor financing and the periods payable:

Period
  Millions
of rubles
 

Payable in 2004

    472  

Payable in 2005

    205  

Payable in 2006

    205  

Payable in 2007

    205  

Payable in 2008

    120  
       

Total

    1207  
       

        GlobalTel is in default with respect to payments due in 2004, 2005, 2006, 2007 and 2008 and has not obtained a waiver from Globalstar L.P. As a result, we classified the total balance of RUB 1,207 million as current in our consolidated balance sheet as of December 31, 2008. Penalty interest in the amount of RUB 401 million has accrued for each day of delay at the rate of 10% per annum, and is included in the vendor financing payable. In 2006, Loral, which is the legal successor of Globalstar L.P., brought an action against GlobalTel demanding immediate repayment of the debt and seeking penalties. As of the date of this annual report, GlobalTel did not pay the ordered amount because it lacks the funds to do so. If we are forced to pay on GlobalTel's behalf, our management believes that such repayment by us of the defaulted vendor financing, loans and penalties ordered by a

155



court will not have a material adverse effect on our business, financial condition and results of operations.

        As of December 31, 2006, 2007 and 2008, we were not in compliance with certain covenants in relation to a loan we obtained from Vnesheconombank and CSFB and no waiver had been obtained from the banks. Therefore, the entire loan amount was included in the current portion of long-term loans in our consolidated balance sheet as of as of December 31, 2006, 2007 and 2008. To date, we have not received notice from the banks confirming their waiver of the breach of the loan due to our non-compliance with the covenants.

        Except as set forth above, as of the date of this annual report, we are not in default on any payment of principal or interest, a sinking or purchase fund installment.

This excerpt taken from the ROS 20-F filed Jun 30, 2008.

A.    Defaults

        Due to insufficiency of cash flow generated by GlobalTel from its operating activities to cover both its operating expenses and refinancing its indebtedness in full, GlobalTel was in default of payments to Loral and GlobalStar L.P. as of December 31, 2007 in the amount of RUR 225 million. The loan from Loral does not provide for any collateral. A penalty in the amount of RUR 55 million is included in the outstanding balance. As of the date of this annual report, GlobalTel has not obtained waivers from Loral on the loan. In July 2006, Loral brought an action against GlobalTel claiming immediate repayment of RUR 225 million. In March 2007, the London Court of International Arbitration, or LCIA, ruled in favor of Loral. However, in October 2007, the Arbitration Court of the city of Moscow dismissed Loral's claim to enforce the decision of the LCIA.

        GlobalTel is also in default in respect of payments of its vendor financing payable for 2004, 2005, 2006 and 2007 totaling RUR 1,246 million payable to GlobalStar L.P. for the purchase of three gateways and associated equipment. The vendor financing agreement provides for a pledge of all equipment received from GlobalStar L.P. under the agreement until all payments are made. The following table sets forth the amounts payable under the vendor financing and the periods payable:

Period

  Millions of rubles
Payable in 2004   395
Payable in 2005   171
Payable in 2006   171
Payable in 2007   171
Payable in 2008   100
   
Total   1,008
   

        GlobalTel is in default with respect to payments due in 2004, 2005, 2006 and 2007 and has not obtained a waiver from Globalstar L.P. As a result, we classified the total balance of RUR 1,008 million as current in our consolidated balance sheet as of December 31, 2007. Penalty interest in the amount of RUR 238 million accrued for each day of delay at the rate of 10% per annum, and is included in the vendor financing payable.

        We believe that if immediate repayment of the defaulted vendor financing and loans is demanded, it would not have a material adverse effect on our business, financial condition and results of operations.

        As of December 31, 2007, we were not in compliance with certain covenants in relation to a loan we obtained from Vnesheconombank and CSFB and no waiver had been obtained from the banks. Therefore, the entire loan amount was included in the current portion of long-term loans in our consolidated balance sheet as of December 31, 2007. Subsequently, in June 2008, we received notice from the banks confirming their waiver of the breach of the loan due to our non-compliance with the covenants. As of December 31, 2006, the outstanding indebtedness due within one year included the RUR 2,636 million loan provided by Vnesheconombank and CSFB, which was included in the current portion of long-term loans due to non-compliance with one of the covenants as of the balance sheet date, for which we had obtained a waiver in June 2007.

        Except as set forth above, as of the date of this annual report, we are not in default on any payment of principal or interest, a sinking or purchase fund installment.

146


This excerpt taken from the ROS 20-F filed Jun 30, 2006.

A.   Defaults

We entered into a JPY 11,601 million (RUR 3,089 million) credit agreement, dated August 16, 1994, or the Debt Obligation, with the Council of Ministers of the government of the Russian Federation and Vnesheconombank. The principal of the loan was repayable in equal annual installments of JPY 2,105 million, with the final payment due not later than October 2001. The interest rate was 3% per annum. In 2000, a resolution was passed by the government providing for the restructuring of the indebtedness over a 10-year period at an interest rate of 3% per annum. In accordance with the provisions of the resolution, we entered into negotiations in 2001 with respect to restructuring this credit agreement. However, as the resolution did not specify the procedure for the debt restructuring, as of December 31, 2002 and 2001, we were technically in default with respect to the principal and interest on the Debt Obligation.

As of December 31, 2002, our overdue indebtedness under the Debt Obligation was JPY 14,165 million, including JPY 11,601 million (RUR 3,089 million) of principal, JPY 45 million (RUR 12 million) of interest and JPY 2,519 million (RUR 667 million) of fees and penalties.

On May 12, 2003, our Board of Directors approved the restructuring of the Debt Obligation with Alfa Bank to act as agent. In June 2003, we, the Russian government and Vnesheconombank agreed that we would restructure the Debt Obligation pursuant to the terms of a new government resolution adopted pursuant to the Federal Law on the Federal Budget for the Year 2003. We agreed with Alfa Bank to restructure the Debt Obligation on the terms of an agency agreement dated June 2003. Our obligations under the Debt Obligation would be terminated (except with regard to interest due on overdue payments) upon Alfa Bank repaying the Debt Obligation by purchasing from its own funds, and transferring to the Russian government, certain outstanding Russian government securities or debts denominated in foreign currencies, as prescribed in the new government resolution. Such transfer was made in June 2003 and the Russian government confirmed the termination of our obligations under the Debt Obligation. In exchange for the termination of our obligations, we issued promissory notes to Alfa Bank for approximately U.S.$98.6 million at an interest rate of 5.94% per annum payable in six equal semi-annual installments, to be redeemed within 36 months of the date of the agency agreement. The agency agreement provides for the possibility of early redemption of the promissory notes by us at our sole discretion. Pursuant to the terms of the agency agreement, we paid a fee to Alfa-Bank of U.S.$100,000. On September 16, 2003, pursuant to a Russian government resolution, the Russian government waived our obligation to repay interest on overdue amounts under the Debt Obligation because our obligations under the Debt Obligation had been satisfied. As of December 31, 2005, the total value of our outstanding promissory notes to Alfa Bank equaled U.S.$15.2 million.

As of December 31, 2005, our subsidiary GlobalTel is in default in respect of payments of its loans and vendor financing payable and has not obtained waivers from creditors. GlobalTel defaulted on loans, which are due to Loral in the amount of RUR 201 million and vendor financing of RUR 1,182 million payable to GlobalStar L.P. for the purchase of three gateways and associated equipment. The loans from Loral do not

154




provide for any collateral, while the vendor financing agreement provides for a pledge of all equipment received from GlobalStar L.P. under the agreement until all payments are made. As of the date of this annual report, GlobalTel has not obtained waivers from either Loral or GlobalStar L.P.

Period

 

 

 

Millions of rubles

 

Payable in 2004

 

 

462

 

 

Payable in 2005

 

 

201

 

 

Payable in 2006

 

 

201

 

 

Payable in 2007

 

 

201

 

 

Payable in 2008

 

 

117

 

 

Total

 

 

1,182

 

 

 

GlobalTel is in default in respect of payments in 2004 and 2005 and has not obtained a waiver from GlobalStar L.P. As of December 31, 2005, penalty interest in the amount of RUR 107 million is accrued at the rate of 10% per annum for each day of delay. GlobalStar L.P. or its legitimate successors have not demanded immediate repayment of the defaulted vendor financing and loans. We believe that if such immediate repayment is demanded, it would not have a material adverse effect on our results of operations, financial position and operating plans.

Except as set forth above, as of the date of this annual report, we are not in default on any payment of principal or interest, a sinking or purchase fund installment.

This excerpt taken from the ROS 20-F filed Jun 29, 2005.

A.  Defaults

We entered into a JPY 11,601 million (RUR 3,089 million) credit agreement, dated August 16, 1994, or the Debt Obligation, with the Council of Ministers of the government of the Russian Federation and Vnesheconombank. The principal of the loan was repayable in equal annual installments of JPY 2,105 million, with the final payment due not later than October 2001. The interest rate was 3% per annum. In 2000, a resolution was passed by the government providing for the restructuring of the indebtedness over a 10-year period at an interest rate of 3% per annum. In accordance with the provisions of the resolution, we entered into negotiations in 2001 with respect to restructuring this credit agreement. However, as the resolution did not specify the procedure for the debt restructuring, as of December 31, 2002 and 2001, we were technically in default with respect to the principal and interest on the Debt Obligation.

As of December 31, 2002, our overdue indebtedness under the Debt Obligation was JPY 14,165 million, including JPY 11,601 million (RUR 3,089 million) of principal, JPY 45 million (RUR 12 million) of interest and JPY 2,519 million (RUR 667 million) of fees and penalties.

On May 12, 2003, our Board of Directors approved the restructuring of the Debt Obligation with Alfa Bank to act as agent. In June 2003, we, the Russian government and Vnesheconombank agreed that we would restructure the Debt Obligation pursuant to the terms of a new government resolution adopted pursuant to the Federal Law on the Federal Budget for the Year 2003. We agreed with Alfa Bank to restructure the Debt Obligation on the terms of an agency agreement dated June 2003. Our obligations under the Debt Obligation would be terminated (except with regard to interest due on overdue payments) upon Alfa Bank repaying the Debt Obligation by purchasing from its own funds, and transferring to the Russian government, certain outstanding Russian government securities or debts denominated in foreign currencies, as prescribed in the new government resolution. Such transfer was made in June 2003 and the Russian government confirmed the termination of our obligations under the Debt Obligation. In exchange for the termination of our obligations, we issued promissory notes to Alfa Bank for approximately US$98.6 million at an interest rate of 5.94% per annum payable in six equal semi-annual installments, to be redeemed within 36 months of the date of the agency agreement. The agency agreement provides for the possibility of early redemption of the promissory notes by us at our sole discretion. Pursuant to the terms of the agency agreement, we paid a fee to Alfa-Bank of US$100,000. On September 16, 2003, pursuant to a Russian government resolution, the Russian government waived our obligation to repay interest on overdue amounts under the Debt Obligation because our obligations under the Debt Obligation had been satisfied. As of December 31, 2004, the total value of our outstanding promissory notes to Alfa Bank equaled US$48.6 million.

As of the date of this annual report, we are not in default on any payment of principal or interest, a sinking or purchase fund installment.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki