Mirax Offers to Build Russia Tower

Mirax Group, one of Russia's top five property developers, said Wednesday that it would approach Mayor Yury Luzhkov with an offer to take the construction of the 612-meter skyscraper Russia Tower off the hands of its cash-strapped developer, Shalva Chigirinksy.

Mirax owner Sergei Polonsky also told reporters that the company had successfully managed to roll over $317 million in debt, including a $200 million loan from Credit Suisse that came due Monday.

"Raise your hands if you wanted the news today to be that Mirax was going bankrupt," Polonosky joked at the beginning of a news conference.

Polonsky went on to chastise journalists for publishing stories on the crisis-hit real estate sector and for listening to "nonsense" real estate analysts.

"I am positive that if we got rid of all the analysts and threw them on an island, there would be no more crisis," he said.

He said Mirax is also finalizing refinancing negotiations with holders of $180 million in credit-linked notes, a deal that would help the company stave off put options on the notes valid later in the first quarter.

Banks will be paid a percentage of the total amount due this month, and the rest will be paid over a two-year period under varied interest rates, said Mirax board member Dmitry Lutsenko.

Polonsky said he was ready to buy Chigirinsky's stake in the Russia Tower project for $43.5 million, the same price that Chigirinsky cited last week when he offered to sell to Sibir Energy. The energy company, in which Chigirinsky owns a controlling stake, did not agree to buy the tower.

"We propose to the mayor that the Russia Tower be built according to old plans," Polonsky said, referring to reports this week that City Hall planned to shave 400 meters off the building.

"If they can only build 200 meters, we will build the full 612 meters. We have consulted with investors and have an idea about how to go about accomplishing this," he said.

Mirax is in the process of completing construction on the Federation Tower skyscraper, located near the Russia Tower site in the Moskva-City business district.

Polonsky said Mirax didn't plan on discussing a deal with Chigirinsky until City Hall gave its opinion on the project's future.

"This is a very serious announcement. I'm ready to put my money where my mouth is," Polonsky said.

The mayor's office declined comment Wednesday, as did the tower's British architect, Foster and Partners. Chigirinsky's development company, Russian Land, did not respond to multiple requests for comment.

Polonsky said he also would offer Luzhkov a second proposal -- to rename the Federation Tower as the Russia Tower.

"Without the Russia Tower, the Moskva-City project is nothing," he said. "Considering the administration's plans to reduce the Russia Tower's planned height, we ask the mayor to consider giving the branded name 'Russia' to the Federation Tower, which is currently the tallest building in the business complex."

Polonsky's ambitious remarks came a day after Fitch downgraded Mirax's debt rating from B- to CCC, citing the developer's weak liquidity position to cover short-term debt maturities.

The financial crisis has put the squeeze on real estate developers, which were expanding full speed ahead until September, when the liquidity crunch all but cut off their ability to refinance debt and borrow anew to finance both ongoing construction and new projects.