Ukraine's XXI Century gets consents needed to amend 10% bonds

By Angela McDaniels

Tacoma, Wash., July 20 - XXI Century Investments Public Ltd. has paid consent fees to the holders of its $175 million 10% guaranteed secured notes due 2010, according to a company news release.

The consent fee consisted of 2,068,698 new ordinary shares of the company in the form of depositary interests and 163,241 warrants exercisable for 4,244,266 shares.

The warrants are exercisable from May 24, 2012 to May 24, 2013.

The consent solicitation for the notes began June 11 and expired July 2. Bondholders voted on the changes at a meeting on July 3.

As previously reported, the company was seeking consents to:

• Extend the maturity date of the notes to Nov. 24, 2014;

• Adopt an amortization schedule under which principal installments would be paid in November of 2010, 2011, 2012, 2013 and 2014;

• Capitalize the interest due July 8 and add a pay-in-kind option for future interest payments;

• Lower the interest rate to 9%. The in-kind interest rate would be 9% through Nov. 24 and 15% after that;

• Remove the put options falling on and after July 8;

• Modify some covenants and events of default;

• Grant the noteholders the right to nominate a non-executive director to the board of directors, whose consent would be needed for some matters, including to asset disposals, investment in joint ventures, the release of guarantors of the notes, changes in the payment of directors and senior management, affiliate transactions and the incurrence of debt;

• Require the company to use 50% of excess proceeds from disposals and new financings, other than for the development of existing projects, to prepay the notes;

• Add more subsidiaries as guarantors of the notes and a provision for the release of guarantors on a permitted disposal or where such release is required in connection with a third-party investment in or a construction/development financing;

• Grant a new put option that would be exercisable if the articles of association are amended in a manner that affects the ability of the noteholders to appoint or remove their nominated director or the powers of the nominated director. It would also be exercisable if the board refuses to appoint the individual selected by the noteholders or if shareholders pass a resolution to remove the nominated director, except on specified grounds;

• Modify of the definition of "extraordinary resolution" to reduce to 50% from 75% the majority of votes cast at a meeting of noteholders for approvals required, during some limited periods, of some matters that would otherwise require the consent of the nominated director if during that period no nominated director is appointed to the board; and

• Modify the requirements for written resolutions of noteholders, which currently requires holders of 90% of the principal amount of the notes to sign such resolutions, to provide that such resolutions may take effect if signed by holders of 75% - or, in some matters, 50% - of the outstanding principal amount of the notes.

To be approved, the proposed amendments needed a majority vote of 75% of the votes cast at the meeting.

Holders of more than 90% of the notes had submitted instructions to vote in favor of the amendments as of June 29, according to a previous news release.

The changes agreed to by the bondholders were one of two restructuring options proposed by the company in April after holders of $134.91 million of the notes submitted notices indicating their plan to exercise their put options.

The company warned of a substantial risk that it would not be able to make the interest payment or meet its obligations to redeem the put notes.

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

The solicitation agent was Renaissance Capital Financial Consultant Ltd. (+7 495 258 7777, Attn: Kieran Donnelly/Boris Batin, debt capital markets).

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

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