Privatbank may offer restructuring of USD 150 mln notes on Nov. 11

Ukraine’s biggest lender Privatbank (PRBANK) informed the holders of its subordinated Eurobonds (outstanding USD 150 mln, due in February) of a possible meeting on Nov. 11 to approve the bond’s restructuring, Debtwire reported on Oct. 21, citing its own sources. We were not able to confirm this information with other sources. According to Debtwire, the bank has offered a hike in the coupon rate on the bond to 11% (from 5.8% currently) and a 5Y maturity extension to February 2021. The bank also offered a 2% early consent fee for those accepting the offer by the Nov. 9 deadline. The bank warned of the risk that it will be placed under temporary administration of the state regulator if the offer is not approved by the end of November, according to the source.

Privatbank will also apply to the High Court of London to get permission for restructuring the Eurobond under a UK scheme of arrangement, Debtwire said. For the purpose of the scheme, the holders of the USD 150 mln in notes and holders of USD 70 mln in a newly issued shareholder loan should be treated as “single-class creditors.” The quorum at a possible Nov. 11 scheme meeting will be 75%, according to the Debtwire report.

Recall, the holders of Privatbank’s USD 200 mln in Eurobonds, which initially matured on Sept. 23, voted on Sept. 7 to extend their maturity to Jan. 15, 2016. This maturity will be automatically extended to Jan. 23, 2018 if by Jan. 5, 2016 Privatbank secures a 5Y maturity extension on the USD 150 mln in subordinated bonds. The first attempt to approve such a 5Y extension failed on July 13.

Alexander Paraschiy: The holders of the USD 150 mln in subordinated Eurobonds have enough reasons to approve the restructuring, even without a scheme or threats of the bank’s bankruptcy after the end of November. Given the bank’s limited dollar liquidity, the holders of the subordinated bonds should be aware of the low likelihood that the bank will be able to repay USD 350 mln in two Eurobonds due in January and February of 2016. To avoid triggering such soon payments, the holders of the subordinated Eurobonds have no other option but to agree to the 5Y maturity extension. Otherwise, the risk will increase that the bank will declare itself insolvent and the holders of the subordinated bonds will be among the last in the queue of those demanding debt recovery.

At the same time, we would be surprised if the London court supports the idea that the owners of the bank, who recently provided it the USD 70 mln in loan to the bank, and intenational holders of its USD 150 mln subordinated loan that was issued five years ago, should be treated equally.

We reiterate our view on PRBANK bonds as very risky.

Источник: Конкорд Капитал