Kazakh bank BTA secures new bailout deal

By bne IntelliNews October 4, 2012

Clare Nuttall in Astana -

Kazakhstan's BTA Bank announced on October 3 that it has agreed a non-binding restructuring deal with creditors on debt of $11.2bn - the second revamp of debt the state-owned bank has pushed through in three years.

Under the agreement, BTA will exchange existing debt for a combination of new notes and cash, the bank said in a statement. All members of BTA's creditors' committee, except Japanese bank Nomura International, backed the deal, it claimed. Kazakhstan's third largest lender said that the agreement will "help ensure the viability of the bank".

Under the agreement, Kazakhstan's sovereign wealth fund Samruk-Kazyna - BTA's controlling shareholder - will increase its stake by converting deposits into equity. The fund will also provide a $1.59bn interest-bearing loan, which is subordinated to the new notes. Since BTA's first debt restructuring was concluded in September 2010, Samruk-Kazyna has held an 81.5% stake in BTA. Its shareholding after the second restructuring has not been disclosed.

Under the non-binding agreement, the new notes to be issued to creditors will have a nominal value of $750m, with a semi-annual coupon of 5.5% p.a. and maturity in 2022. In exchange for their notes, senior noteholders will receive $957.8m of cash and $88.8m of new notes, recovery unit holders will receive $660.2m of cash and $61.2m of new notes and original issue discount noteholders will receive $600m of new notes, the bank said.

BTA has also reached an agreement with its Revolving Committed Trade Finance Facility (RCTFF), under which the maturity of the $348.2m facility will be extended until December 31, 2015. The agreement offers creditors a better deal than expected, analysts told Bloomberg, and also appears to ensure the continued functioning of the bank, which has been rocking despite an earlier restructuring in 2010.

"We believe that this restructuring will provide the bank with a sound and stabilised balanced financial structure going forward. We hope to complete the restructuring by year end 2012," BTA CEO Yerik Balapanov said in the statement.

BTA came close to collapse in early 2009, due to a combination of fraud and over-exposure to Kazakhstan's real estate market. The government, through Samruk-Kazyna, nationalised both BTA and Alliance Bank - the country's fourth largest at the time - in February 2009.

BTA initially agreed a restructuring deal with creditors in September of that year, and pushed it through in May 2010, a move which cut its net debt to $4.2bn. However, the bank's financial situation deteriorated once more in the second half of 2011, and in January 2012 it defaulted on a payment due on a $2.1bn bond.

Part of the problem with the initial restructuring deal was that it relied heavily on the recovery of assets from the bank's former owner Mukhtar Ablyazov. BTA's new management is pursuing Ablyazov and his associates through the British court system and in other jurisdictions, in an attempt to recover around $5bn in lost assets. However, Ablyazov fled the UK in February 2012 and his whereabouts are not currently known.

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