Astana Finance Creditors to Absorb 80% Loss in Kazakh Deal

Sep 21. Bloomberg

By Nariman Gizitdinov

Astana Finance Creditors to Absorb 80% Loss in Kazakh DealAO Astana Finance’s international creditors will absorb a loss of 80 percent on its bonds under an agreement reached with the Kazakh financial company that defaulted in 2009.

Holders of Astana Finance’s foreign-currency debt will be repaid 20 cents on the dollar, receiving cash and bonds maturing in one and four years, according to the term sheet published by the company today and signed with its international creditors’ committee Sept. 15.

Astana became the third Kazakh lender to default after it stopped servicing its international debt in May 2009 as Kazakhstan slipped into its first recession in a decade. The company has $1.7 billion of debt outstanding, according to data compiled by Bloomberg.

The Kazakh company will allocate $100 million in cash to distribute to creditors and issue $75 million of one-year zero- coupon bonds, Astana Finance said. It will also issue four-year bonds so that total compensation reaches 20 percent of the debt value now held by creditors, it said.

International creditors will also get at least 60 percent of shares in Astana Finance as well as 12-year recovery notes, under which they will receive a share of anything recovered from impaired assets, the company said. Trade-finance lenders are likely to accept the option, the company said.

Kazakh creditors will receive subordinated notes amortizing after the four-year bonds issued to international creditors come due, according to the statement.

Astana Finance’s creditors’ committee rejected another debt-restructuring proposal last month for the second time, the company said Aug. 23.

BTA Bank, Alliance Bank, AO Astana Finance and Temirbank, then controlled by BTA, also defaulted in 2009, leaving about $20 billion in debt to be restructured. BTA, Alliance and Temirbank have completed their debt restructuring after nationalization.