Russia's top food retailer by revenue, said on Friday it has secured 7 billion roubles ($255 million) in financing from VTB (VTBR.MM: Quote, Profile, Research, Stock Buzz) bank as part of the government's rescue plan for the retail sector.

 

X5 Retail Group, which has over $350 million in short-term debt maturing by the end of this year, said in a statement the financing will be provided in the form of a revolving credit line open for 18 months. It gave no other details or terms.

 

"We welcome the initiatives of the government to support Russian retail, which, along with financing, imply long-term measures aimed at promoting the development of the industry," X5 Chief Executive Lev Khasis said in the statement.

 

"Financing provided to leading retailers...should help to minimise the consequences of the financial crisis."

 

Russian retailers, along with real estate developers, have been among the most aggressive borrowers in the past few years and among the first to fall victim to the large-scale credit crunch which has made it too expensive to refinance their debts.

 

Russia has launched a wide-ranging rescue plan worth more than $200 billion for the economy and financial markets and has entrusted state-controlled banks such as VTB with helping real economy players refinance short-term debts.

 

VTB said in a separate statement on Friday it was examining more than 30 billion roubles ($1.09 billion) in applications from leading retailers.

 

As of June 30, X5's total debt was $2.3 billion. The number includes more than $700 million of short-term debt, of which X5 has to repay almost half before the end of 2008.

 

Khasis earlier said X5 would withdraw funds from its operational cash flow to refinance debts if it fails to secure financing from the state, which will depress its growth.

 

X5 is majority owned by Russian billionaire Mikhail Fridman's empire, Alfa Group.

 

As of Sept. 30, the company's multiformat chain comprised 1,027 stores. In 2007, revenues were $5.3 billion. (Editing by David Cowell)