First Ukrainian solicits consents for 9¾% loan participation notes

By Angela McDaniels

Tacoma, Wash., Nov. 30 - CJSC First Ukrainian International Bank has begun a consent solicitation for the $275 million of 9¾% loan participation notes due 2010 issued by Standard Bank plc, according to a CB filing with the Securities and Exchange Commission.

First Ukrainian said the rapid deterioration of the Ukrainian economy amid the global economic slowdown has impacted its business. In particular, it has been affected by a significant devaluation of the Ukrainian hryvnia and increasing defaults by customers on its corporate and retail loan portfolio.

As a result, the bank has entered into negotiations with its creditors and noteholders in order to undertake a comprehensive debt rescheduling.

The bank is soliciting consents to:

• Extend the maturity date of the notes to Dec. 31, 2014 from Feb. 16, 2010;

• Extend the repayment date of the loan that Standard Bank extended to First Ukrainian using the note proceeds to Dec. 31, 2014 from Feb. 16, 2010;

• Increase the interest rate on the notes and the loan to 11% from 9¾%;

• Add a partial repayment clause under the loan;

• Change the frequency of interest payments under the notes and loan to quarterly from semiannually;

• Decrease the minimum denomination of the notes to $90,000 from $100,000;

• Add a partial redemption under the notes;

• Add an event of default in the loan;

• Change the name of the bank to PJSC First Ukrainian International Bank;

• Amend the definition of permitted security interest in the loan; and

• Make all other consequential changes to the conditions, the loan agreement or the trust deed as are needed to make the above changes.

The bank said that if the consent solicitation is not successful, it will be unable to meet its obligations to make payments under its loan agreement, which in turn would affect the ability of Standard Bank to make payments under the notes. Moreover, the bank said its liquidity position will deteriorate further, thereby increasing the risk of National Bank of Ukraine involvement and imposition of temporary administration, a moratorium on debt repayments or other regulatory measures.

Holders will vote on the proposed amendments at a meeting on Dec. 15. The deadline to submit voting instructions is 5 a.m. ET on Dec. 11.

Holders who vote in favor of the changes will be entitled to a partial redemption of their notes. The partial redemption amount is 8% of par plus accrued interest on that amount.

The partial redemption date will be Feb. 16.

HSBC Bank plc (+44 0 20 7991 5874) and ING Bank NV, London Branch (+44 0 20 7767 5107) are the solicitation agents, and Lucid Issuer Services Ltd. (+44 0 20 7704 0880) is the tabulation agent.

First Ukrainian is based in Kiev, Ukraine.

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