Ukraine’s PrivatBank gives details of failed bid to amend two series

By Susanna Moon

Chicago, July 15 – Ukraine’s PJSC Commercial Bank PrivatBank said the holders of 82.34% of the 9 3/8% loan participation notes due 2015 represented at its July 13 meeting voted in favor of amending the notes.

Despite this support, the bank was unable to amend the $200 million of 9 3/8% notes because it lacked approval from holders of its $150 million 5.799% loan participation notes due 2016, as reported July 14.

At the meeting, holders of about 83.85% of the 9 3/8% notes were represented, and 17.6% of those holders voted against the proposal, according to a notice from the bank.

The holders of 85.38% of the 5.799% notes were represented at the meeting. The bank said 69.08% of those holders voted for the measure and 30.84% of those holders voted against it.

Because approval by holders of the 5.799% notes was a condition to completion of the amendment of the 9 3/8% notes, neither consent solicitation could be completed.

PrivatBank held meetings on July 13 in London at 11 a.m. ET for holders of the 9 3/8% notes and at 11:30 a.m. ET for holders of the 5.799% notes.

PrivatBank sought to reduce its debt service obligations under the two series of notes to improve its short-term liquidity parameters, to maintain financial flexibility and to establish a more efficient maturity profile for its wholesale borrowings, according to a previous bank press release.

This would have allowed PrivatBank to sustain its operations during the current crisis in Ukraine, help with any further pressure on its liquidity and perform its obligation, the bank previously said.

The downturn in economic growth and the ongoing political crisis in Ukraine have materially and adversely affected PrivatBank and its business, the release said.

PrivatBank said it has obtained Ukrainian hryvnia-denominated liquidity support loans from the National Bank of Ukraine.

The 9 3/8% notes were issued by UK SPV Credit Finance plc, and the 5.799% notes were issued by ICBC Standard Bank plc, each for the purpose of funding a loan to PrivatBank.

Solicitation terms

The bank sought the following amendments under the 9 3/8% notes:

• To extend the repayment date to Jan. 23, 2018 from Sept. 23, 2015;

• To add an amortized repayment provision and a corresponding amortized redemption provision, consisting of a repayment of 30% of the principal amount remaining on Sept. 23, 2017 and 70% of the principal amount remaining on Jan. 23, 2018; and

• To increase the coupon to 10% from 9 3/8%.

The bank was seeking the following amendments under the 5.799% notes:

• To substitute UK SPV Credit Finance for ICBC Standard Bank as issuer;

• To extend the repayment date to Feb. 9, 2021 from Feb. 9, 2016;

• The raise the coupon to 11% from 5.799%;

• The release of the charged property and the transferred rights; and

• To make all other consequential changes to the note terms to qualify as tier 2 capital for National Bank of Ukraine purposes.

The consent fee would have been $20 for each $1,000 principal amount of notes.

The consent solicitation ended at 11 a.m. ET on July 8.

The solicitation agent is Commerzbank AG (+49 69 136 59920 or liability.management@commerzbank.com). The tabulation agent is Lucid Issuer Services Ltd. (+44 0 20 7704 0880 or privatbank@lucid-is.com).

PrivatBank is a lender based in Dnipropetrovsk, Ukraine.

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