13:44 11.01.2017

Holders of PrivatBank's eurobonds go to London court

Holders of eurobonds of nationalized PrivatBank (Dnipro) seek to challenge the forced exchange of their securities to the additionally issued shares in the London Court of International Arbitration (LCIA), the Bloomberg has reported, referring to well informed sources.

Dechert law firm acts as advisor to the bondholders.

The holders of the bonds, including First Geneva Capital Partners, Pala Assets and Pioneer Investment Management, hope to receive foreign assets of the bank as a compensation of their investment, Bloomberg said.

Bloomberg has not yet received any respond from the sides to messages seeking comment.

As reported, as part of the nationalization of PrivatBank, its obligations to a Special Purpose Vehicle (SPV, Britain), the issuer of eurobonds, was subject to bail-in procedures and were exchanged for the bank's additionally issued shares.

Later the Individuals Deposit Guarantee Fund that introduced temporary administration at the bank, sold all the bank's shares to the state for UAH 1.

At the end of December 2016 the holders of more than 20% of eurobonds in nationalized PrivatBank united in an ad hoc committee for the common protection of their rights and interests after the exchange of their securities for the additionally issued shares of the bank. The committee consists of five funds, including British, American and Swiss, holding different issues of securities for a total of more than $120 million.

The bailed-in notes are as follows: $175 million 10.875% senior unsecured loan participation notes due February 28, 2018, $200 million 10.25% senior unsecured loan participation notes due January 23, 2018 ($40 million was paid in August 2016), and $220 million 11% subordinated loan participation notes due 2021.

UK SPV Credit Finance Plc registered in Britain issued the notes due in January and February 2018. The notes due 2021 were issued via ICBC Standard Bank Plc (Britain), but during restructuring the debt were re-registered to UK SPV Credit Finance Plc.

According to the conditions of the issue of notes due February 2018, the issuer would provide the funds raised after the placement of the notes as a debt to PrivatBank. The securities have limited resource.

According to the document, if the bank is declared insolvent, the bank is transferred to the management of the Individuals Deposit Guarantee Fund. The fund appoints a temporary administrator to the bank who is authorized to take any steps to restore solvency of the bank.

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