Privatbank gets restructuring approval of its 2015 Eurobond

Ukraine’s biggest lender Privatbank (PRBANK) convened on Sept. 7 a meeting of the holders of its USD 200 mln in Eurobonds due on Sept. 23, reporting 85% of bondholders having been represented. 97% of the meeting’s participants voted in favor of the offered restructuring terms, according to the bank’s announcement on Sept. 7.

Following the restructuring vote, the USD 200 mln notes will be repayable on Jan. 15, 2016 if Privatbank does not reach by Jan. 5, 2016 a restructuring deal with the holders of its USD 150 mln in notes maturing on Feb. 9, 2016. The restructuring of the USD 150 mln notes should include a maturity extension by at least five years. If the restructuring deal is reached by the Jan. 5 deadline, the USD 200 mln notes will be repayable on Jan. 23, 2018. In this case, the bank will repay 20% of the notes’ principal on Aug. 23, 2016 and Feb. 23, 2017, then 15% of the principal on May 23, Aug. 23, and Nov. 23 of 2017 and the remainder 15% on the maturity date. The bank will increase the coupon rate on the USD 200 mln notes to 10.25% (from 9.375%) and will pay on Sept. 16 a 2% consent fee to those having approved the restructuring deal by the Sept. 2 deadline.

Alexander Paraschiy: Following the restructuring, Privatbank’s USD 200 mln notes would yield 40% if they mature in 2018 (43% for those that are eligible to receive a consent fee) and 221% if they mature in 2016 (249% for those that are eligible to receive a consent fee), we estimate. We believe that such a big difference between yields at different scenarios is a key risk for Privatbank. Now the holders of the USD 200 mln in notes have a big temptation to prevent the smooth restructuring of the bank’s USD 150 mln in notes by the Jan. 5 deadline. Needless to say, the bank is unlikely to have enough liquidity to repay the two dollar-denominated bonds in the beginning of the next year. For this reason, we believe the notes of Privatbank are too risky today.

Источник: Конкорд Капитал