Sept 18 - Fitch Ratings has assigned TCS Finance Limited’s USD250m 10.75% senior unsecured loan participation notes, due 18 September 2015, a final Long-term rating of ‘B’ and Recovery Rating of ‘RR4’.
TCS Finance Limited, an Ireland-domiciled special purpose vehicle, will use the proceeds from the notes to finance a loan to Tinkoff Credit Systems (TCS-bank) and will only pay noteholders principal and interest received from the bank. The notes are also guaranteed by Egidaco Investments Plc, the parent holding company of TCS Bank.
Terms of the issue include a change of control clause should Mr. Oleg Tinkov cease to own at least a 50% share of the bank. Under the covenants of the loan agreement, negative pledge is limited by the permitted lien threshold of USD5m and permitted securitisation threshold of 30% of credit card receivables (by value). Sale of assets should not exceed 10% of consolidated total assets (except NPLs). Financial covenants include (i) maintenance of CBR capital adequacy ratio at no less than 13% if TCS is rated below ‘BB-’ by Fitch or Ba3 by Moody‘s, or 12% if TCS is rated above ‘BB-'/Ba3 and (ii) the ratio of exposure to a single borrower should not exceed 30% of net asset value (NAV, the group’s consolidated assets less consolidated liabilities) or 50% of NAV if the borrower has an investment grade rating.
The notes will rank at least equally with TCS’s other senior unsecured obligations, except those preferred by relevant legislation. Under Russian law, the claims of retail depositors rank above those of other senior unsecured creditors. At end-H112, retail deposits accounted for 45% of total liabilities of TCS according to the bank’s local accounts.
TCS is the first and currently only credit card monoline company in Russia, established in 2006 by Russian businessman Oleg Tinkov. A 29% stake was subsequently sold to Goldman Sachs and Scandinavian private equity fund Vostok-Nafta, while 8% was purchased by private equity fund managed by Baring Vostok Capital Partners. Following rapid growth in 2011-Q112, the bank had a market share of approximately 6% of credit card receivables at end-Q112.