Holders fail to approve extension of Privatbank’s Sept. 23 Eurobond

Обзор облигаций 14.08.2015 Ukraine’s leading lender Privatbank (PRBANK) failed to gather a quorum at an Aug. 13 meeting of the holders of its USD 200 mln Eurobond that matures on Sept. 23, according to the bank’s exchange report of the same day. The meeting will be adjourned to Aug. 27, with a quorum of 1/3 and pass rate of 3/4, the issuer reported. At the meeting, the bank wanted the holders to agree on the postponement of the bond's maturity to Dec. 1, 2015. The bank is planning to use this extra time to reach new restructuring terms with the holders of both its 2015 and 2016 bonds, simultaneously. Recall, at their July 13 meetings, the holders of the 2015 notes accepted the restructuring terms offered by the bank, but the holders of the 2016 notes rejected them, thus spoiling the results of both votes. Last week, Privatbank promised to improve the restructuring terms of its 2015 bond, as compared to the first offer (made ahead of July 13 meeting), if the holders accept a 10-week maturity extension. On Aug. 12, Debtwire reported that some of the holders of Privat’s 2015 notes, controlling more than 25% of the issue, were intending to vote against the extension. They were reportedly offended by the bank refusing to engage with the holders ”to find mutually acceptable restructuring terms”. Alexander Paraschiy: Approval of the restructuring is critical for Privatbank to avoid both default and a liquidity crisis. As little time remains until the maturity of the bank’s nearest Eurobond, we expect Privatbank will try to propose new restructuring terms to holders (better than the previous two proposals) to facilitate extension approval at the adjourned meeting. Maybe this time the bank will also try to contact the offended holders personally to find agreement with them on some details of the possible restructuring. In any case, we expect a mutual understanding will be reached between the bank and the holders over the next two weeks. Thus far, we are bullish on Privatbank’s 2015 notes, which promise over 30% yield assuming the restructuring under the latest promised terms.