ALMATY Aug 4 Kazakhstan's mid-sized Alliance
Bank has agreed a preliminary deal with creditors
aimed at restructuring around $1.2 billion of its debt and
paving the way for a planned merger with two smaller lenders.
The restructuring, the bank's second in four years, will cut
the nominal value of creditors' existing bond holdings by around
a half to $300 million, analysts said.
The banking sector of the vast, oil-producing nation of 17
million was hard hit by the global financial crisis due to its
overexposure to external borrowing and a bloated real estate
Alliance is 51 percent controlled by Kazakhstan's sovereign
wealth fund Samruk-Kazyna and plans to form a combined bank with
two smaller banks controlled by Kazakh billionaire Bolat
Utemuratov - Temirbank and ForteBank.
"We believe that the restructuring will provide the bank
with the restored capital base and liquidity necessary for its
consolidation with Temirbank and ForteBank," Alliance Bank Chief
Executive Timur Issatayev said in a statement on Monday.
"We hope to complete the restructuring and the legal
consolidation of the three entities by the end of 2014."
Alliance, the Central Asian nation's 10th-largest bank by
assets, said creditors would be able to swap their existing
notes for packages of "New Notes", equity in the new, combined
bank, and cash.
The New Notes will have a principal of $236.6 million, to be
paid in 16 equal semi-annual installments, with a semi-annual
coupon of 11.75 percent a year and maturing ten years after the
"We estimate that the degree of recovery for debt holders in
this restructuring equals approximately a half of the nominal
value of the notes which they are holding," Bakay Madybayev,
analyst at Halyk Finance investment company, said.
"Today the nominal value of the debt, which does not include
the recovery notes ... is worth around $600 million," he said.
Alliance Bank said that holders of its notes maturing in
2017 will receive $50 million in cash, $175.6
million in New Notes and equity in the combined bank worth about
Holders of Par Notes due in 2020 will
receive $8.1 million in cash, $61 million in New Notes and
equity in the combined bank worth around $21.4 million.
Holders of recovery notes due in 2020 will receive $41.8
million in cash, while holders of subordinated notes maturing in
2030 will receive equity in the combined bank worth $6.7
million, Alliance said.
Samruk-Kazyna said it will support the transaction by
converting 66.3 billion tenge ($364 million) of existing and at
least 11.9 billion tenge ($65 million) of new deposits with the
bank into a 10-year "Special Term Deposit" bearing interest of 4
(Reporting by Mariya Gordeyeva; Writing by Dmitry Solovyov;
Editing by Erica Billingham)