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.