Ministry of Finance of the Russian Federation
Ministry of Finance of the Russian Federation

Press release


The Ministry of Finance of the Russian Federation, International Bank for Economic Co-Operation (IBEC), International Investment Bank (IIB) and the Lloyds TSB Bank as chairman of the consultative Working Groups of IBEC and IIB creditors jointly announce that they have reached an agreement in principle on the financial terms of a settlement of the IBEC and IIB debt.

The agreement follows a meeting in London on 18th July 2001 and subsequent consultations between the Ministry of Finance of the Russian Federation, IBEC, IIB and Lloyds TSB Bank, as representative of the Working Groups. At the meeting the delegation of the Russian Federation was headed by Deputy Minister of Finance Sergei I. Kolotoukhin; the delegation of IBEC was headed by the Chairman of the Board of IBEC Vitaliy S. Khokhlov; the delegation of IIB was headed by the Chairman of the Board of IIB Mikhail A. Sarafanov; and the delegation of Lloyds TSB Bank was headed by Director, International Advisory Services Uri Winterstein.

The debt will be settled through the exchange of IBEC and IIB debt for a package of Russian Federation Eurobonds due 2030, Russian Federation Eurobonds due 2010 and cash (the "Restructuring package") on terms that are broadly comparable to but no better than the terms relating to the settlement of the commercial debt of the former USSR to foreign commercial creditors.

The exchange will be carried out in two stages. In the first stage the debt of IBEC and IIB to the participating creditors will be exchanged for an equal amount of debt of Vnesheconombank of the USSR (VEB) to IBEC and IIB under credits granted by IBEC and IIB to the former USSR. In the second stage of the exchange process the VEB debt received by the participating creditors in the first stage will be automatically and simultaneously exchanged for the Restructuring package.

The value of the Restructuring Package that a participating creditor will receive will be calculated solely by reference to the amount of its principal and interest claims on IBEC and IIB and will not be affected by the terms of the claims on VEB debt received by the Participating creditor in the first stage of the exchange process.

It is a condition to the exchange offer that a participating creditor agrees to release IBEC and IIB from any claims it may have against IBEC or IIB.

Implementation of the exchange will be subject to additional terms and conditions to be announced. It is anticipated that the exchange process will be officially launched this year.