Egidaco Investments soliciting bondholder consent for restructuring proposal

By Caroline Salls

Pittsburgh, March 5 - Egidaco Investments plc, the parent company of Russian monoline bank Tinkoff Credit Systems' Bank, has sent a proposal to holders of its €18 million of series 1 18% bonds to amend the conditions of the bonds and restructure the company's RUR 1.5 billion facility loan, according to a news release.

Under the proposal, the facility would be restructured by extending the scheduled repayment date to Sept. 24, or three months after the redemption date for the bonds, from June 24; deferring payment of the quarterly coupon payable to the company's subordinated lenders to the rescheduled repayment date; increasing the coupon to 6%; and not allowing any amortization under the facility before the rescheduled repayment date.

Changes to the bond conditions would include introduction of semiannual interest payments and a mandatory amortization condition; lowering the early redemption amount to 100% of the nominal amount; replacing an existing covenant with a revised covenant imposing a minimum group equity equal to $5 million and increasing to $7.5 million on Jan. 1, 2010, $12.5 million on July 1, 2010 and $20 million on Jan. 1, 2011; and introducing an obligation for the company to notify the agent of an event of default within the 30-day cure period.

A new tranche of bonds would also be issued under the proposal, which will be subordinate to the existing bonds.

The company said some bondholders have agreed to exchange their current €10.5 million of bonds for the same amount of tranche B subordinated bonds at an exchange ratio of 1 to 1.

Payment of the coupon on the new bonds would be deferred to maturity, except for the first coupon paid in lieu of interest on bonds being exchanged for tranche B bonds.

The proposal also includes a default waiver that runs through April 8.

The bondholders must submit consents by March 20.

According to a previous news release, Egidaco breached a financial covenant on the bonds that fixes the minimum levels for equity and equity plus subordinated debt because of a sharp decline in the ruble rate against the U.S. dollar. The company said the covenant is denominated in U.S. dollars.

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