BTA of Kazakhstan Submits Proposals to Rearrange Debts, FT Says

Sept. 22. Bloomberg

By Ben Martin

BTA of Kazakhstan Submits Proposals to Rearrange Debts, FT SaysBTA Bank has submitted two proposals to renegotiate its debts to Kazakhstan’s regulator, the Financial Times reported, without attribution.

The proposals are to renegotiate $10.3 billion in debts and one has been developed by the bank and a counter-proposal has been devised by its creditors, the newspaper said. BTA offered creditors four restructuring options including a cash buyback option while creditors submitted a counter-proposal last week, the FT said.

http://www.bloomberg.com/apps/news?pid=20601095&sid=aJ4xDNLJEIYI

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BTA submits plans to rearrange debts

September 22. Financial Times

By Isabel Gorst

BTA, Kazakhstan’s biggest bank, has submitted two proposals to renegotiate its $10.3bn debts to the country’s regulator – one designed by the bank itself and a counter-proposal developed by its creditors.

The bank has been in negotiations with a group of international creditors including ABN Amro, -Commerzbank, Standard Chartered, JPMorgan, ING, KfW, and funds DE Shaw, and Fortis Investment Management with the aim of agreeing a memorandum of understanding (MOU) as a basis for a restructuring and recapitalisation plan.

BTA has offered creditors four restructuring options including a cash buyback option for a maximum of $1bn of the total debt with an 82.25 per cent discount. The steering committee of creditors submitted a counterproposal last week.

Kazakhstan’s financial regulator had set the bank a deadline of September 18 for BTA to agree the MOU with creditors. Negotiations are now focused on agreeing the terms of the deal.

Renaissance Capital, the broker, said the restructuring terms were “very unfavourable to creditors”, but added that “under conservation and/or bankruptcy actual recoveries could be even worse”.

Samruk Kazyna, Kazakhstan’s sovereign wealth fund, paid $1.7bn in February for a controlling stake in BTA citing concerns about its stability. Mukhtar Ablyazov, BTA’s former chairman, accused the -government of corporate raiding and fled to London.

Other restructuring options offered to creditors included a seven year debt rollover at a discount of 60 per cent and at reduced interest and a 15 year -subordinated rollover at no discount and at reduced interest. Creditors were invited to convert debt into equity at a discount of 80 per cent.

Investors said the inclusion of BTA’s trade finance liabilities, accounting for about 17 per cent of the bank’s debt, in the restructuring, would disrupt confidence in Kazakh banks.

In a letter to Nursultan Nazarabayev, the Kazakh leader, the Bankers Association for Finance and Trade (a global body representing the international trade and finance industry) and the International Financial Services Association warned that altering the terms of trade finance repayments could “significantly jeopardise a country’s source of funding for critical economic advancement”.

BTA halted principal payments in May after some creditors demanded repayment, citing change of ownership covenants.

Samruk Kazyna took advice on the restructuring from Lazard Freres and has hired Lovells, the UK law firm, and PriceWaterhouseCoopers, to track down missing assets.

BTA is braced for a net loss of 1,120bn Tenge ($7.5bn) this year but says it will return to profitability next year.

http://www.ft.com/cms/s/0/45323714-a710-11de-bd14-00144feabdc0.html

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