June 19, 2017 / 9:03 PM / a year ago

Azeri state-run bank IBA modifies some debt restructuring terms

LONDON, June 19 (Reuters) - Azerbaijan’s biggest state-run bank, IBA, said on Monday it was modifying some of the debt restructuring terms offered to its creditors, including adding an extra amortisation payment to the new bond that will be issued as part of the swap.

The International Bank of Azerbaijan (IBA) infuriated creditors when at the end of May it unveiled a plan to restructure some $3.3 billion in debt and said senior creditors, including Eurobond holders, would need to write down some debt and wait longer to be paid.

Creditors were instead offered the chance to swap their holdings for $1 billion in sovereign bonds, with senior creditors given the chance to choose from three restructuring options.

The bank said in a statement that “having taken into account feedback received from certain creditors and with the concurrence of the Ministry of Finance of Azerbaijan” it had modified “particular aspects of the restructuring plan”.

It said the new bond maturing 2032 would be redeemed in three equal annual installments, instead of two installments as stated previously.

Participants would also be allowed to request several different allocation options, instead of opting for just one, it added. Finally, claimants who agree to vote in favour of the overall restructuring plan and choose their restructuring option within an 11-day period will be awarded their preferred allocation, the bank added.

This is a departure from the original “first-come, first served” stipulation.

The bank also said that accrued interest on outstanding debt would be calculated up to Sept. 1, 2017, as opposed to the previously stated July 13, 2017.

IBA is being advised by Lazard and law firm White & Case.

Creditors include commodities trader Cargill, Italian lender Intesa Sanpaolo, Germany’s Commerzbank and Bayerische Landesbank and French bank Societe Generale while some big asset managers are among holders of its Eurobond.

Two ad-hoc groups of creditors have formed and IBA said it has been in talks with one group which controls around $400 million worth of debt.

Another group which includes Franklin Templeton, Fidelity and two smaller funds, VR and Promeritum, recently filed an objection in a U.S. court against the restructuring plan .

Neither group could be reached for comment on the updated restructuring proposals. (Reporting by Sujata Rao; Editing by Toby Chopra)

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