Egidaco 18% bondholders must re-vote on consent solicitation due to technical error

By Angela McDaniels

Tacoma, Wash., April 30 - Egidaco Investments plc said it must issue a new voting notice to the holders of its €70 million 18% bonds due 2011 due to a technical error in the voting documents, and a new vote will be required in order to formally approve the change in the documents.

The bondholders voted at a meeting in mid-April to approve a restructuring proposal. Of the 63.07% of eligible votes present at the meeting, 83.58% voted in favor of the proposal.

Wording errors in the consent solicitation memorandum make it impossible to satisfy one of the conditions following the bondholder vote, according to a company news release.

The changes required refer only to restructuring of the ruble facility agreement, do not affect the new benefits to bondholders under the revised terms and conditions of the bonds, and the new vote is being held purely for technical reasons, Egidaco stressed.

The amended documents will be sent out shortly.

As previously reported, the company began a consent solicitation on March 30 after its original proposal to amend the conditions of the bonds and to restructure its RUR 1.5 billion loan facility failed to gain majority approval. The solicitation ended on April 16.

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

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. Ohman J:or Fondkommission AB (+46 8 402 51 32) is 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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