VTB Obtains Controlling Stake in Don-Stroi Invest
31.08.2009

VTB obtained the rights to a controlling stake in a unit of developer Don-Stroi and will restructure its debts, the bank said Wednesday.

Russia’s heavily indebted construction sector has been badly hit by the global credit crunch and the deep recession of the county’s economy — the first in a decade — and banks are accumulating control of troubled developers’ assets.

“VTB and the shareholders of Don-Stroi Group signed a memorandum of agreement, which provides the bank with the right to acquire 50 percent plus one share of Don-Stroi Invest,” the bank said in a statement.

VTB will restructure the debts of Don-Stroi to the bank and may also provide additional project financing, the bank said.

Kommersant reported Wednesday that VTB will pay a symbolic sum of 500 rubles ($16) for the stake in Don-Stroi Invest, a subsidiary of the developer, and will restructure a $500

million loan it provided to the developer.

The deal will also see Don-Stroi and VTB divvy up their projects, with VTB taking over Don-Stroi Invest and its housing development projects and Don-Stroi retaining its commercial real estate units.

The acquisition requires the permission of the Federal Anti-Monopoly Service, and no deal will be signed before January 2010.

The loan was issued to Don-Stroi, which has built some of Moscow’s most high-profile luxury housing in recent years, including a tower in the style of Moscow’s Stalin-era “wedding cake” buildings.