Parex gets new funds

  • 2010-02-10
  • From wire reports

RIGA - At a closed session on Feb. 9 the Latvian government, after discussing a report on Parex bank’s syndicated loan repayment plan, agreed on an additional 100 million lats (142.8 million euros) cash injection into the bank, reports news agency LETA. The allocation of these resources is being supported by the government’s ruling coalition.
According to information provided by Parex, of the approximately 218 million lats which is necessary for the current credit syndicate repayment, the bank will be able to provide around 118 million lats from its own resources. The state, as the bank’s owner, will provide support to cover the remaining part, “in accordance with the previously planned schedule and amount.”
The additional money will be in the form of a new term deposit.

The Ministry of Finance claims that with this transaction, the overall liabilities of Parex to the state will be reduced, as a state guarantee had been given for the full amount of syndicate credit, while the actual sum required is smaller than was predicted in 2009, thanks to successful efforts by Parex to stabilize the bank’s situation and improve its solvency.
The revised schedule for the syndicated debt repayments involved an initial March 2009 payment of 232.5 million euros, or 30 percent of the total sum; the current February 2010 payment of 310 million euros, which is 40 percent of the total sum; and a further payment in May 2011 of 232.5 million euros, the final 30 percent of the total sum.