September 22, 2009 / 6:33 AM / in 9 years

UPDATE 2-Kazakh bank BTA signs debt restructuring MOU

* Signs debt restructuring MOU with creditors

* Creditors propose alternative scheme

* To undergo due diligence check before final deal

(Adds analyst quote, details, background)

ALMATY, Sept 22 (Reuters) - Kazakh state-run bank BTA BTAS.KZ on Tuesday reported progress in talks to restructure its $10 billion debt by signing a memorandum of understanding (MOU) with its creditors’ steering committee.

The memorandum includes restructuring plans proposed by both the bank and the committee and provides that BTA, which wants to cut its debt by $8 billion, would not go bankrupt as long as the talks go on.

The creditor committee’s plan includes a new debt issuance in addition to a $1 billion cash buyback and a separate option for trade finance debt. BTA’s plan treated all debt classes equally and proposed issuing only equity and recovery notes.

The signing was “a nice step towards the implementation of the restructuring process,” Luis Costa, analyst at Commerzbank said.

“It looks like the terms have improved decently from the preliminary ones published a few weeks ago,” Costa said, referring to the plan suggested by creditors. [ID:nLI92288]

BTA and the creditors would work towards agreeing terms for the restructuring “following completion of a due diligence exercise to be performed by KPMG and Deloitte on the appropriate level of provisioning on BTA’s loan assets”, BTA said in a statement.

“The MOU is non-binding on any financial creditor and the restructuring will be subject to certain conditions precedent,” it added.

Trade finance creditors have earlier warned Kazakhstan that restructuring such liabilities in the same way as others could leave the whole country cut off from export and import finance.

The state took over the bank in February and in April it went into default. The government has accused BTA’s former managers of fraud that led to the bank’s large losses, a charge they have denied. [ID:nL3169365] (Writing by Olzhas Auyezov, editing by Dmitry Sergeyev and Mike Nesbit)

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