LONDON, July 21 (IFR) - International Bank of Azerbaijan (IBA) said a plan to restructure US$3.3bn of its debt won approval from creditors holding 93.9% face value of the affected credits.
Claimants with 94.1% of the principal amount cast votes, the state-run bank said in a statement on Tuesday, Reuters reported. Two-thirds support was needed for the plan to be adopted.
IBA creditors include domestic state oil fund Sofaz, commodities trader Cargill, Italian lender Intesa Sanpaolo, Germany’s Commerzbank and Bayerische Landesbank and France’s Societe Generale. Several big asset managers are holders of its Eurobond.
IBA infuriated investors when it first unveiled the restructuring in May but, after modifying terms, offered them the chance to swap some holdings for sovereign bonds, with senior creditors holding some US$2.4bn given three options.
“The satisfactory outcome of IBA’s restructuring demonstrates that the plan supported by the Ministry of Finance serves the long-term interests of the bank and of its creditors,” Azeri finance minister Samir Sharifov said in a statement.
Senior creditor Sofaz will see its US$1bn exchanged for a new seven-year IBA bond under the plan. Among the remaining senior creditors, more than 92% opted to swap their IBA debt for a new 15-year sovereign bond, representatives for IBA said on a conference call.
Among junior bondholders, which held US$100m and were forced to take the highest haircut of 50%, the approval rate was still in excess of 85%, said IBA adviser Eric Lalo from Lazard on the call.
The success of the operation will help the government meet a target of privatising IBA by the end of 2018, according to the statement.
IBA chairman Khalid Ahadov added on the call that the lender had been approached by certain financial institutions already.
“They have been waiting when the restructuring process will be successfully over, so after that they will start an official process with us,” Ahadov said.
A global slump in oil prices has battered the economy of the former Soviet republic, in turn hurting Azerbaijan’s manat currency and local banks.
Also speaking on the call, Ian Clark from IBA’s legal adviser White & Case said there had been no contact with a group of creditors in New York, who had filed an objection in June against the restructuring plan.
Asset managers Fidelity Management & Research and Franklin Templeton Investment Management and hedge funds Promeritum Fund and VR Global Partners are members of that group, which holds some US$220m of IBA bonds at face value. (This story will appear in the July 22 issue of IFR Magazine)