(Rewrites first paragraph, adds quotes from Utemuratov
representative, writes through)
By Dmitry Solovyov and Mariya Gordeyeva
ALMATY Jan 23 Kazakhstan's Alliance Bank has
set out terms for a second debt restructuring in the wake of the
global financial crisis, potentially paving the way for its
acquisition by Kazakh billionaire Bolat Utemuratov.
Alliance is 67 percent owned by local sovereign wealth fund
Samruk-Kazyna but needs to find new investors after Kazakh
President Nursultan Nazarbayev last year ordered the fund to
sell holdings in several local banks which it bailed out in the
The bank, the central Asian nation's ninth-largest lender by
assets, said its latest proposals applied to debts worth around
127.3 billion tenge ($818 million) and would involve lenders
agreeing to take substantial "haircuts" or losses on their
Winning investor approval for the proposed restructuring is
also crucial to quickly achieve a planned integration between
Alliance and smaller Temirbank, also controlled by
Utemuratov, in the process of acquiring a sizeable minority
stake in Alliance Bank and a majority of Temirbank, is looking
for all parties to come together to agree a deal, his spokesman
"We understand that the capital shortfall is significant but
all the parties need to continue to work together and find an
equitable solution for everyone," Guram Andronikashvili, a
representative of Utemuratov, told Reuters.
He said the first restructuring of Alliance had failed to
create value and "maybe assumptions used in the first
restructuring were too optimistic ... So we want to make sure it
gets done properly this time."
Utemuratov is widely expected to eventually acquire the
state's entire stake in Alliance.
INJECTION FROM CREDITORS
Alliance said it needed an injection of 95.6 billion tenge
from creditors - effectively the aggregate value of haircuts on
its various tranches of debt - for its adequate
Alliance, which previously restructured its debt in 2010,
said it was offering to exchange senior notes due 2020
for new securities with a 65.3 percent "haircut",
It is also offering to exchange dollar bonds due 2017
for new debt with a 71.2 percent haircut. The
bonds fell 16 points to 34 cents on the dollar, according to
Alliance offered to exchange subordinated notes maturing in
2030 for new debt or a cash buyback with an 88 percent haircut.
The bank also proposed a cash buyback of its so-called
"recovery" notes with a 90 percent haircut. Recovery notes are
issued to creditors during some debt restructurings and are
supposed to pay out whenever the issuing company manages a
certain level of asset recovery.
Alliance had already said last month it had decided not to
make full payment on its recovery notes.
Under the terms of the deal, the bank's shareholders will
also contribute a total of 57.1 billion tenge to help
The bank said it aimed to complete negotiations with
investors by June.
Alliance said it expected creditors and their advisers would
complete due diligence in April and to sign a preliminary term
sheet with its creditors' committee in the same month, in a bid
to complete restructuring negotiations in June.
But reaching a compromise may not be easy.
"The creditors are likely to try and bargain," said Bakay
Madybayev, analyst at investment company Halyk Finance.
($1 = 155.10 tenge)
(Additional reporting by Sujata Rao and Carolyn Cohn in London;
Editing by David Holmes)