Bloomberg News

BTA Said to Pitch Debt Restructuring Proposal by Year-End

December 28, 2011

(Updates with bonds in seventh paragraph.)

Dec. 16 (Bloomberg) -- Kazakhstan’s BTA Bank may ask shareholders and creditors to consider its second debt restructuring before year-end, according to two people familiar with the matter.

The people didn’t give details of the plan and declined to be identified because the information isn’t public. Lazard Freres & Co., which acted as an adviser to BTA during its debt reorganization in 2009, assessed the cost of another restructuring last month, two people with direct knowledge of the matter said last week.

Kazakh sovereign-wealth fund Samruk-Kazyna took over BTA in February 2009, two months before the nation’s largest lender at the time defaulted on $12 billion of debt. The state holds an 81.5 percent stake in BTA, which won 92 percent creditor approval for a restructuring plan in May 2010. The bank said in September it has a $150 million coupon payment due in January.

BTA had its credit rating downgraded two steps from B3 to Caa2, eight levels below investment grade, at Moody’s Investors Service last week. The move reflected “a lack of a return to profitability, a capital deficit and a possible further debt restructuring,” according to a statement released Dec. 7.

Fitch Ratings lowered BTA’s debt score one step to CCC from B- on Nov. 14 because of the “increased probability of BTA’s default in the near to medium term” and Standard & Poor’s withdrew the bank’s ratings four days earlier.

Capital Gap

The lender faced a capital shortage of 162 billion tenge ($1.1 billion) under international accounting standards as of Nov. 1 after it set aside more money to cover souring loans, according to a statement e-mailed Nov. 28. The bank has a total of $5.2 billion of debt, according to data compiled by Bloomberg.

The yield on BTA’s dollar-denominated notes due in 2018 yesterday soared 212 basis points, or 2.12 percentage points, to a record 58.975 percent. That compares with the 8.859 percent the bonds were yielding in October 2010.

BTA didn’t reply to an e-mailed request seeking comment. Chief Executive Officer Marat Zairov on Nov. 26 declined to say if the bank plans to restructure debt for a second time.

Samruk-Kazyna will make a decision on how to assist the lender based on a business plan it expects to get from BTA, Yuriy Cherkasov, an Astana-based spokesman for the fund, said by phone yesterday. He declined to comment on a possible debt restructuring.

“We aren’t going to bankrupt BTA,” Peter Howes, managing director at Samruk-Kazyna, said in an interview yesterday. “But ultimately we don’t want to be the main shareholders of this bank and we’ve always said that. Of course, we need to sell our stake but we aren’t in any rush.”

--With assistance from Svetlana Antoncheva in Astana, Kazakhstan. Editors: Paul Abelsky, Balazs Penz

To contact the reporter on this story: Nariman Gizitdinov in Almaty at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net


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