Russia's Kazanorgsintez asks 9¼% noteholders to OK increase to debt ratio

By Laura Lutz

Des Moines, May 1 - Kazan OJSC (Kazanorgsintez) is seeking noteholder approval to increase the allowable debt ratio under the loan agreement relating to the outstanding $200 million of 9¼% loan participation notes due 2011 issued by Kazanorgsintez SA.

The company is also seeking waivers of a breach under the existing debt rules.

Holders who electronically vote in favor of the measure by 10 a.m. ET on May 14 will receive a payment equal to 1.5% of the principal amount of their notes.

Holders who vote after that early deadline but before 5 p.m. ET on May 19 will receive a payment equal to 1.25% of the principal amount of their notes.

Those payments will be contingent on passing of the measure.

A noteholder meeting will be held on May 21 to consider the measure.

Kazanorgsintez said its capital expenditures for 2007 were over budget, and that caused the company to incur additional debt. That debt resulted in a breach of the "limitation on indebtedness" covenant in the notes' loan agreement.

The company is seeking approval to waive that breach and to increase the ratio in the debt limitation covenant to six to one until June 30, 2009.

If the resolution passes, the company said it will conduct a one-time maintenance test of the ratio of debt to EBIDTA for the year ending June 30, 2009. That ratio should not exceed four to one, the company said.

ING Bank NV (+44 20 7767 5107) is the solicitation agent.

Kazanorgsintez is a chemical company based in Kazan, Russia.

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