Ukraine's XXI Century seeks consents to delay interest payment, put option for 10% notes

By Angela McDaniels

Tacoma, Wash., April 29 - XXI Century Investments Public Ltd. has begun a consent solicitation for its $175 million 10% guaranteed secured notes due 2010, according to a company news release.

The company is seeking to implement a 45-day standstill period that would delay the May 24 interest payment and put option to July 8.

As of the close of business on April 28, the holders of $134.91 million of the notes had submitted notices indicating their plan to exercise the put option.

Noteholders will vote on the proposed standstill period at a meeting in London on May 21.

On April 23, XXI Century held a conference call to discuss a proposed restructuring of the notes by means of an exchange offer and/or consent solicitation. The company said that on that call, holders of a majority of the notes said they needed more time to assess the restructuring proposals and proposed the 45-day standstill period.

XXI Century will continue its discussions with the noteholders in order to finalize the restructuring proposals and said the launch of an exchange offer and/or further consent solicitation would be timed to allow the restructuring to take effect before the revised put option date and interest payment date.

The company warned that whether or not the proposed amendments take effect, a substantial risk remains that it would not be able to make the interest payment or meet its obligations to redeem the put notes.

Restructuring options

On April 17, the company announced plans to restructure its obligations under the notes through a potential offer to exchange the notes for dollar-denominated guaranteed secured notes due 2010/2012 and to solicit consents from noteholders for approval to amend the notes.

The new notes would be issued with warrants to subscribe for depositary interests representing common shares in XXI Century.

As previously reported, the company said it expects to give the noteholders two options.

Under the first option, holders would retain their notes subject to the proposed amendments, which include the following:

• Extension of the maturity to November 2014;

• Introduction of an amortization schedule providing for repayment installments beginning in 2010 and ending in 2014;

• Granting an option to the company to capitalize interest payments, with the rate to accrue at 9% per year if paid in cash and 11% if capitalized; and

• Revisions to covenants and events of default.

Under the second option, holders would be able to exchange their notes for new notes and warrants, which would result in a 42% writedown in the principal amount of the debt. The new notes would be subject to an amortization schedule providing for repayment installments beginning in 2010 and ending in 2012. The terms and conditions would otherwise be substantially the same.

Questions about the consent solicitation can be directed to head of investor relations Aliona Osmolovska or head of marketing and public relations Dimitri Vasylev at +380 44 2000 457. Investors may also contact Kieran Donnelly (+7495 604 4457, +7495 970 6951, kdonnelly@rencap.com) or Boris Batin (+7495 258 7777, bbatin@rencap.com) of Renaissance Capital.

XXI Century is a Kiev, Ukraine-based real estate investment, development and property management company.

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