LONDON Jan 12 Holders of Kazakh bank
BTA's Eurobonds said on Thursday they are considering
forcing early repayment on BTA's senior debt if the bank goes
into default next week, potentially allowing other creditors to
demand repayment of up to $8 billion.
They were speaking to Reuters a day after Anvar Saidenov,
chairman of BTA which is 81.5 percent owned by the country's
sovereign wealth fund Samruk-Kazyna, effectively quashed any
hope that $160 million in coupons, originally due Jan. 3, would
be paid within a 10-day grace period.
Creditors are enraged they are being asked to agree another
debt restructuring after an initial round in 2010 cut BTA's debt
by two-thirds to $4.2 billion. They say the bank and its
majority owner are unwilling, rather than unable to pay.
Saidenov did not say what kind of writedown creditors may
have to take but noted BTA's $5 billion capital shortfall by
end-2012. That implies the haircut will be substantial.
"If the default crystallises, the next step would be to
formalise a creditor committee and force an acceleration," said
one member of an ad hoc group of creditors speaking on condition
"We are organised and can move very quickly."
Another member of the group said the bank was leaving little
alternative to investors other than to fight for their cash,
given the impending default.
"It seems clear they are taking a very hostile stance, a
stance that makes it very difficult to negotiate in good faith.
They are leaving very few options for investors."
The ad hoc group of bondholders also told BTA they may take
legal action in a Dec. 30 letter sent via law firm Dewey &
The 2018 bond prospectus states that at least a fifth of
debt holders must participate in the action to accelerate bond
payments. But the ad hoc creditor group, members of which spoke
to Reuters, claims to own over a quarter of the outstanding
The assumption has been that a BTA Eurobond default would
allow other creditor classes also to call in debt they are owed.
The biggest single one would be Recovery Notes (RN), which have
a reference or par value of $5.2 billion and were issued to some
creditors during the 2010 restructuring.
Other outstanding bonds total $3 billion.
CROSS ACCELERATION, NOT CROSS DEFAULT
But BTA's lawyers left recovery note investors dismayed at
Wednesday's meeting, telling them a Eurobond default would not
automatically trigger default across other assets. Holders of
RNs for instance would be able to accelerate only if any other
debt repayments are called in, they said.
An acceleration of RN notes reduces senior bondholders'
incentive to accelerate, because triggering $5.2 billion in RN
payments would drastically slash asset recovery volumes.
"The recovery notes' ability to accelerate looks weaker than
originally thought," Andre Andrijanovs, an analyst at Exotix
said in a note. "(BTA's lawyers) White & Case made the point
that it is in the interest of senior creditors not to accelerate
so that Recovery Notes do not get their right to accelerate."
Recovery Notes have fallen further after BTA's investor
meeting, quoted at 3 cents on the dollar, analysts said. The
2018 bond also hit record lows of 15 cents on the dollar
BTA warns that without a compromise it faces insolvency,
potentially leaving investors with no recovery. But some
creditors counter that they will lose little by forcing
acceleration, having already taken a hefty haircut during the
"They are asking creditors to bear the burden," one
(Reporting by Carolyn Cohn and Sujata Rao; editing by Ron