Kazakh bank BTA urges creditors to approve debt deal

LONDON Thu Nov 8, 2012 6:20pm GMT

LONDON Nov 8 (Reuters) - Managers at Kazakh bank BTA , owned by the country's sovereign wealth fund, urged creditors to vote in favour of a debt restructuring plan which some shareholders are threatening to block.

Creditors are unlikely, however, to benefit from any assets seized from former BTA chief Mukhtar Ablyazov, they said on Thursday.

The bank defaulted for the second time in three years in early 2012, on a $2.1 billion bond that was the product of a previous restructuring.

Every member of a creditors' committee except Nomura agreed last month to a deal which will include some cash for creditors and new notes with a nominal amount of $750 million, leaving investors with a 55 percent haircut.

The main worry is that holders of BTA equity via Global Depositary Receipts (GDRs) could also refuse to approve the deal, given a risk of diluting their shareholding.

BTA chairman Anvar Saidenov said he was confident the process would be completed by year-end as planned, because up to 90 percent of the GDR holders are also reckoned to be bondholders who will benefit from the debt restructuring.

"There are lots of things which could prevent GDR holders from voting positively," Saidenov told Reuters. "We hope the message that we made during all these presentations meets its objective and we can manage a successful vote by GDR holders."

Marcia Favale-Tarter, advisor to Kazakhstan's prime minister Serik Akhmetov, said blocking the restructuring would leave debt as well as equity investors out of pocket.

"If the restructuring doesn't pass and the bank gets liquidated, then you get zero," she said.

BTA was the largest Kazakh bank to default when the 2008 crisis hit and cut access to global funding markets, forcing sovereign fund Samruk-Kazyna to step in and take a majority stake. Samruk-Kazyna will own an even larger 97.5 percent stake in the bank if the restructuring is agreed.

Samruk has said previously it intended to sell the stake as soon as possible.

Saidenov said a stake sale was still on the cards once the bank's financial health improves.

He said there were plans to tackle BTA's huge burden of non-performing loans, estimated at around $5 billion, by creating a special purpose vehicle.

BTA is also hoping to seize the assets of its former chief, Mukhtar Ablyazov, whom it accuses of embezzling some $6 billion before fleeing to Britain. Ablyazov has been sentenced to 22 months in prison by a UK court which has allowed BTA to start appropriating assets from next week..

Saidenov said the first target was Ablyazov's UK property portfolio, estimated at $100 million. But he said it was unclear how much of the $6 billion total could actually be recovered.

Asked whether any of the recovered assets could be shared by BTA's creditors who have been forced to write off more than 50 percent of their holdings on average, Saidenov said there was no legal obligation to do so.

"After the (pending) restructuring there is no mechanism which will oblige us to share the proceeds," he said. "Of course there will be a certain indirect effect on the creditors while servicing the debt, but otherwise no." (Reporting by Sujata Rao and Carolyn Cohn)

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