Russia's Kazan gets OK from 9¼% noteholders to increase debt ratio

By Angela McDaniels

Tacoma, Wash., June 4 - Kazan OJSC said it obtained noteholder approval to increase the allowable debt ratio in the loan agreement for Kazanorgsintez SA's $200 million 9¼% loan participation notes due 2011.

The company also received a waiver of a breach under the debt limitation covenant, according to a company news release.

The ratio in the covenant will now be 6 to 1 until June 30, 2009.

Kazan began a consent solicitation on May 1, and a noteholder meeting was held on May 21 to consider the measure.

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

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

Previously, Kazan said its capital expenditures for 2007 were over budget, which caused the company to incur additional debt and to breach the debt limitation covenant.

The waiver and amendment were conditioned on Kazan receiving waivers from lenders under various loan facilities. On Wednesday, the company said it successfully obtained these waivers, so the note waiver and amendment are now effective.

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

Kazan is a chemical company based in Kazan, Russia.

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