Egidaco holders give approval to subsequent solicitation for 18% bonds

By Jennifer Chiou

New York, April 17 - Egidaco Investments plc announced that holders of its €70 million of 18% bonds due 2011 granted approval for a new restructuring proposal after the company's original proposal failed to gain majority approval.

Egidaco, the parent company of Tinkoff Credit Systems Bank, reported the final results, which were obtained from agent E. Öhman J:or Fondkommission AB.

Of the 63.07% of eligible votes present at the meeting, 83.58% voted yes.

Tinkoff said in a news release that it would like to express its gratitude to bondholders for their support. The consent solicitation ended at 11 a.m. ET on April 16.

On March 30, the company began soliciting consents from noteholders.

As already reported, the new proposal added a 2% amortization payment to be paid immediately following the receipt of approval and higher minimum equity requirements.

As reported on March 5, Egidaco sent a proposal to the bondholders to amend the conditions of the bonds and to restructure its RUR 1.5 billion facility loan. The bondholders had until March 30 to submit consents.

Under the original proposal, changes to the bond conditions would have included introduction of semiannual interest payments and a mandatory amortization condition; lowering the early redemption amount to par; 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 a 30-day cure period.

The amended proposal changed the minimum equity requirement so that it will increase to $7.5 million on July 1, to $10 million on Oct. 1, 2009, to $12.5 million on Jan. 1, 2010, to $15 million on June 30, 2010 and to $20 million on Jan. 1, 2011.

The company said that based on feedback received during "lengthy and detailed" negotiations with the bondholders, its new proposal also gives bondholders the following benefits:

• A reduction in the senior eurobond tranche A to €59.5 million from €70 million and creation of a junior tranche B, which is subordinated and coupon deferred;

• An increase in asset coverage to 226% from 170% as a result of restructuring, rising to 309% at maturity;

• In addition to the original 18% coupon, about €15 million in accelerated cash-flows through amortization and more frequent coupon payments; and

• Restoration of the subordination layer.

The company needed to receive voting instructions from holders of at least one-fifth of the notes' principal amount outstanding, and three-quarters of the votes cast had to be in favor of the new proposal in order for it to pass.

E. Öhman J:or Fondkommission AB (+46 8 402 51 32) was the agent for the consent solicitation.

Egidaco is the Stockholm-based parent company of Tinkoff Credit Systems Bank, a Russian monoline bank specializing in the issuing and servicing of credit cards.

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