Ukraine's Alfa-Bank gets consents needed to amend 12% notes, plans to redeem them on July 30

By Angela McDaniels

Tacoma, Wash., July 16 - CJSC Alfa-Bank said the holders of the $250 million of 12% loan participation notes due 2011 issued by Ukraine Issuance plc voted to approve amendments to the terms of the notes at a meeting on July 16.

The amendments have been implemented, effective July 16. The changes allow the bank to exchange the notes for new notes and cash, allow the bank to call the notes and remove the Aug. 11, 2009 put option.

Because it was able to successfully amend the 12% notes, the bank now plans to redeem them on July 30.

As previously reported, the bank is holding an exchange offer and consent solicitation for the 12% notes as well as the $345 million of 9¾% loan participation notes due 2009 issued by Emerging Markets Structured Products BV and the $450 million of 9¼% loan participation notes due 2010 issued by Ukraine Issuance.

Alfa-Bank is soliciting consents to amend the 9¼% notes and 9¾% notes to add a call option and to allow the bank to exchange the notes for new notes. A noteholder meeting will be held for these notes on July 23.

Alfa-Bank needs a quorum of two-thirds of the notes to amend their terms and votes from 75% of those attending.

Holders who tender in the exchange offer will receive new 13% amortizing loan participation notes due 2012 and cash.

Alfa-Bank said it is carrying out the exchange because it has been "substantially affected by strained macroeconomic conditions in Ukraine and the world," creating a risk that it might not be able to meet the maturities of the existing notes or the put option on the 12% notes.

For each $1,000 principal amount of the 9¾% notes submitted by the early exchange deadline, Alfa-Bank is offering $270 in cash and $730 of new notes.

For each $1,000 principal amount of the 9¼% notes submitted by the early exchange deadline, Alfa-Bank is offering $150 in cash and $850 of new notes.

For each $1,000 principal amount of the 12% notes submitted by the expiration, Alfa-Bank is offering $270 in cash and $730 of new notes.

Holders of the 9¼% and 9¾% notes who tender after the early exchange deadline or whose debt is called will receive $1,000 principal amount of new notes for each $1,000 principal amount of existing notes. For the 12% notes, the payment on exercise of the call will be $100 in cash and $900 principal amount of new notes per $1,000 principal amount of existing notes.

The new notes will be issued by Ukraine Issuance, pay a quarterly coupon of 13% and mature in August 2013. They will amortize in equal quarterly amounts starting one year after the first coupon payment and have an average life of two years.

The offers began July 1, the early exchange deadline was 11 a.m. ET on July 14 and the offers expire at 11 a.m. ET on July 21. The early deadline does not apply to the 12% notes.

Holders can only participate if they submit enough existing notes to receive at least $85,000 of new notes. This means holders must submit at least $117,000 of 9¾% notes or 12% notes or at least $100,000 of 9¼% notes in order to participate.

When the offer began, the threshold was $100,000 of new notes. The offer was amended on July 7 to lower it to $85,000.

The dealer managers are HSBC Bank plc (call 888 HSBC 4LM, call collect 212 525-5552, +44 20 7991 5874 or liability.management@hsbcib.com) and UBS Ltd. (+44 20 7567 0525 or mark-t.watkins@ubs.com). The exchange and tabulation agent is Lucid Issuer Services Ltd. (+44 20 7704 0880 or abu@lucid-is.com, attention Sunjeeve Patel or Yves Theis).

Alfa-Bank is a Kiev, Ukraine-based commercial and retail bank.

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