Oschadbank agrees terms of the proposed reprofiling with members of the Ad Hoc Committee

Public Joint Stock Company “State Savings Bank of Ukraine” (the “Bank”) recently conducted negotiations with a group of six fund managers, Black River Asset Management LLC, Franklin Templeton Investment Management Limited, Oaktree Capital Management, L.P., Pioneer Investment Management Limited, Spinnaker Capital Limited, and VR Capital Group Ltd, who have formed an ad hoc committee (the “Ad Hoc Committee”).

The Bank is pleased to announce that an agreement has been reached with the Ad Hoc Committee for the reprofiling of the following debt instruments (collectively the “Debt Instruments”):

·         US$700,000,000 8.25 per cent. Loan Participation Notes due 2016 (ISIN: XS0594294695) (the “2016 Notes”) issued by SSB No.1 Plc (the “Issuer”);

·    US$500,000,000 8.875% Loan Participation Notes due 2018 (ISIN: XS0906434872) (the “2018 Notes”) issued by the Issuer; and

·      US$100,000,000 Subordinated Loan due 2017 with RBS as Lender (the “2017 Subordinated Loan”).

The members of the Ad Hoc Committee currently hold approximately 54.3% of the total outstanding principal amount of the Debt Instruments.

Key terms of the reprofiling agreed between the Bank and the Ad Hoc Committee are as follows (subject to approval by the investors in accordance with the respective terms of the Debt Instruments and issuance by the NBU of such approvals as may be required under Ukrainian law in connection with implementation of the reprofiling):

·         the 2016 Notes will be exchanged for new notes  providing for, inter alia, a maturity extension of seven years to 10 March 2023, a coupon increase to 9.375% and an amortization profile pursuant to which (a) 60 per cent. of the principal amount of the 2016 Notes will be redeemed on 10 March 2019 and (b) the remaining principal amount of the 2016 Notes will be redeemed in eight equal semi-annual installments starting on 10 September 2019, with the final repayment due on 10 March 2023 (the “New 2023 Notes”);

·         the 2018 Notes will be exchanged for new notes providing for , inter alia, a maturity extension of seven years to 20 March 2025, a coupon increase to 9.625% and an amortization profile pursuant to which (a) 50 per cent. of the principal amount of the 2018 Notes will be redeemed on 20 March 2020 and (b) the remaining principal amount of the 2018 Notes will be redeemed in ten equal semi-annual installments starting on 20 September 2020, with the final repayment due on 20 March 2025 (the “New 2025 Notes”);

·         the 2017 Subordinated Loan will be first exchanged for loan participation notes  with the terms of the loan underlying such notes providing for, inter alia, a maturity extension by seven years to 19 January 2024, a coupon increase to USD 6-month Libor plus 6.875% and an amortization profile pursuant to which (a) 50 per cent. of the principal amount of the 2017 Subordinated Loan will be redeemed on 19 January 2020 and (b) the remaining principal amount of the 2017 Subordinated Loan will be redeemed in eight equal semi-annual instalments starting on 19 July 2020, with the final repayment due on 19 January 2024;

·         the following exchange mechanism will also be made available to noteholders: 

o   Option for holders of the 2016 Notes: Holders will have the right to elect to receive either New 2023 Notes or New 2025 Notes. The aggregate maximum amount of New 2025 Notes to be allocated to the electing 2016 noteholders shall not exceed the sum of: (a) USD200m and (b) the demand for New 2023 Notes from holders of 2018 Notes, and allocation shall be subject to the pro ration described below.

o   Option for holders of 2018 Notes: Holders will have the right to elect to receive either New 2023 Notes or New 2025 Notes. The maximum amount of New 2023 Notes to be allocated to holders of 2018 Notes will not exceed the amount of New 2025 Notes allocated to holders of 2016 Notes.

o   Holders of the 2016 Notes will have first priority in allocation of the New 2023 Notes, which will be issued in a maximum size equal to the current total outstanding amount of 2016 Notes (US$700m). Holders of 2018 Notes electing to receive New 2023 Notes will have second priority on a pro rata basis. To the extent that demand for the New 2025 Notes from holders of 2016 Notes exceeds the sum of: (a) US$200m and (b) demand for New 2023 Notes from holders of 2018 Notes, then holders of 2016 Notes will receive pro rata allocations of the New 2025 Notes.

o   As a result, immediately following the reprofiling, the aggregate principal amount of New 2023 Notes and New 2025 Notes will be at least US$500m and will not exceed US$700m, for each of the two series.

·         Completion of the reprofiling of the 2016 Notes and the 2018 Notes will be inter-conditional.

The Bank intends to proceed with implementation of the agreed terms of the reprofiling.  The announcements with respect the timetable of the reprofiling will be made by the Bank in due course.

 

Andriy Pyshnyy, the Chairman of Bank’s Board of Directors, commented:

 

“We are grateful to the Ad Hoc Committee for their commitment to support the reprofiling and for the constructive approach they took in the negotiations that shows their support for Ukraine in this turbulent period. We also believe that the desirability by 2016 noteholders to have an exchange mechanism that allows them to elect to receive the New 2025 Notes rather than the New 2023 Notes shows the noteholders’ confidence in the Bank’s long-term stability.  By achieving agreement on the terms of the reprofiling, Oschadbank complies with, and brings its support to the Cabinet of Ministers in the implementation of, the debt operation under the IMF-supported EFF Program. We look forward to working further with the Ad Hoc Committee and other investors on bringing the reprofiling to a successful conclusion.”

 

Richard Deitz of VR Capital Group Ltd commented:

 

“In the current environment, the indicative terms put forward by Oschadbank represent a reasonable compromise and we look forward to the reprofiling being implemented in due course.”

 

Zafar Zohidov of Black River Asset Management LLC commented:

 

“We believe the proposed reprofiling offers investors acceptable terms and we intend to provide support to the Bank and its advisers as they work to successfully implement the transaction.”

 

For queries in relation to the reprofiling of the Debt Instruments, please contact: Oschadbank@lazard.fr

For queries in relation to the formation of the Ad Hoc Committee, please contact:

Camille Abousleiman – CAbousleiman@dechert.com

Giles Belsey – Giles.Belsey@dechert.com

 

12.06.2015