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MFB to sign MotoGP track credit contract only if all conditions in order

The Hungarian development bank MFB will sign the HUF 15.3 billion (€57.58 million) credit contract for the planned motorcycle racetrack near Lake Balaton if all conditions regarding the credit and the collaterals are in order as judged by the bank and its legal advisors, Economy Minister István Varga said.

The minister said the investment could be completed for the September race if the contract is concluded in the coming days.

Answering a question regarding whether the agreement of MFB, KPMG and Sávoly Motorcentrumfejlesztő and the study prepared by KPMG had been kept secret, Varga said it was a business secret, which is the only reason why it was kept confidential.

The minister said the economic cabinet discussed two proposals on October 13, 2009: one submitted by the Municipal Affairs Ministry responsible for tourism development, which was related to the HUF 2 billion license fee and race organization royalty, and the one concerning the HUF 15 billion credit agreement.

The economic cabinet analyzed all risks and the head of the cabinet, Hungary's finance minister, decided accordingly that further discussions were necessary. The government discussed the matter the following day and decided that the head of the Finance Ministry should conduct the talks and prepare a report regarding whether the contract can be signed and the government decree on the funding published, Varga said.

Answering a question regarding whether funding the investment was considered too risky, uneconomical or possibly even unlawful by the Finance Ministry's experts, the minister said those were versions prepared before the materials submitted to the economic cabinet were drawn up.

The royalty will be covered by the state in order to promote tourism development to help the launch of the race in Hungary, which is guaranteed for ten years, Varga said.

There is no business without any risks, that is what the securities are there for, Varga said, in response to the suggestion that the KPMG study says the business ideas may not be achievable. It is necessary to make sure that the guarantees, the collaterals and the legal terms are appropriate, the minister added.

Varga denied that the risks will be borne by taxpayers. The bank will disburse a credit, which it will recover if the races and other events are held, Varga said.

Answering a question regarding what the consequences will be if the contract is not signed, Varga said: “the consequences must also be considered when we decide to sign the contract, only under certain terms, certain risks and the existing securities. Because they are all matched by securities.”

Sávoly Motorcentrumfejlesztő published the Balatonring impact study on the MTI website on Friday, March 5.

Econews earlier reported that Prime Minister Gordon Bajnai had asked the economy minister to take immediate measures to see that the impact study was made public as soon as possible. The request followed a report on Thursday that finance ministry experts said in an internal document that state support for the planned construction of the MotoGP racetrack was too risky, uneconomical and unlawful.

In the document obtained by index.hu, experts said they did not see any assurance a state loan for the project would be repaid. The operation of the track would require sizable budget support that was not part of budget plans for the mid-term, thus the spending could only cause the deficit to grow, they added.

The government decided in the autumn on HUF 20 billion in state subsidies and a state guarantee for a loan of at most HUF 15.3 billion from MFB for Savoly Motorcentrumfejlesztő, which is building the HUF 40 billion racetrack, called Balatonring, but Finance Minister Péter Oszkó has still not signed the contract. (MTI – Econews)