Domestic creditors reject Astana Finance’s debt restructuring plan

business and economy

Domestic creditors reject Astana Finance’s debt restructuring plan

By SRI ⋅ November 6, 2009 ⋅

(SRI) - Domestic creditors of Astana Finance rejected the proposed debt restructuring plan citing concerns over a lack of transparency and saying it violated a principle of equality among domestic and foreign creditors, according to a statement published on the Kazakhstan Stock Exchange (KASE).

20 out of 35 creditors voted against the agreement that was reached in October between Astana Finance and a committee of foreign creditors. According to Kazakh law, the lender needs 100-percent consent by its creditors for a restructuring plan.

According to the agreement, international creditors would be issued a new seven-year Eurobond with a minimum size of $350 million. In addition, senior creditors would also receive loan recovery notes and up to 59 percent of voting shares in Astana Finance. For senior domestic creditors, meanwhile, the agreement proposed to extend the maturity of all outstanding debt issues to 20 years with straight line amortization following the repayment of the new Eurobond. Domestic subordinated creditors would see their debt converted into shares which will represent approximately 16 percent of the company post-restructuring.

Meanwhile, Astana Finance chairwoman Elmira Ibatullina told Interfax the company plans to sign a term sheet with foreign creditors concerning its liabilities on November 9. According to Ibatullina, the failure to reach an agreement with the lender’s domestic creditors will not affect the signing of the term sheet.

Astana Finance plans to reach a final debt restructuring agreement with domestic creditors by the end of December 2009 and with foreign creditors by the end of January 2010. Its total debt is estimated at $2 billion.