ABB and Ministry of Finance of Azerbaijan start debt operation at Azerbaijan’s largest bank with investor presentation in London.
LONDON - Today, the ABB (ABB) launched its offer to creditors regarding the restructuring of its debt. In an investor presentation in London, ABB provided details of its proposal to ensure the financial viability of the Bank. ABB is a majority state-owned commercial bank.
The proposed restructuring will affect three types of ABB’s indebtedness (trade-finance related instruments, senior instruments and subordinated debt) with an aggregate principal amount of approximately USD 3.3 billion. The proposed debt restructuring contemplates exchange of ABB’s indebtedness, none of which benefits from sovereign guarantee, for direct sovereign obligations of the Republic of Azerbaijan, thereby offering credit enhancement to ABB’s creditors given the country’s higher credit rating.
The full details of the proposed terms can be found in the investor presentation that is available at:
https://www.ibar.az/en/maliyye-ve-investisiya/diger-melumatlar/investorlar-ucun-teqdimat
The largest bank in Azerbaijan and a systemically important institution for the country’s financial system, ABB has been financially supported by the Government of Azerbaijan through combined capital injections and the transfer of bad assets over the past decade. Serious criminal misconduct of certain members of ABB’s previous management and two deep currency devaluations significantly weakened the Bank’s financial position and have necessitated the further measures announced today. As previously stated, the Bank has suspended payments of principal and interest on all obligations included in the restructuring (other than interest on trade finance obligations, which will continue to be paid).
Khalid Ahadov, Chairman of the Board of ABB, said: “Since I was appointed to serve as Chairman of the ABB, the Bank has sought to determine the measures required to ensure its long-term viability and prepare its future privatisation. A systematic assessment of the Bank’s balance sheet has led us to the conclusion that the only way forward is to restructure not only the Bank’s assets but also its liabilities. We are confident that our sound and fair proposal will be agreeable to all creditors affected by the restructuring plan and are committed to finding a long-term solution during this challenging time for the Bank.”
In order for ABB’s debt to be successfully restructured, two-thirds of the affected creditors by value must vote in favour of the proposed restructuring plan at the upcoming creditors’ meeting to be convened tentatively on 13 July 2017. ABB anticipates distributing the notice of the creditors’ meeting, together with an information memorandum describing the restructuring plan and creditor voting process, on 14 June.
Samir Sharifov, Minister of Finance of Azerbaijan, also commented: “ABB has been in serious financial distress since 2015 as a result of internal mismanagement and embezzlement by its former CEO coupled with two rounds of local currency devaluation. The Government of Azerbaijan has led the bail out of the Bank since 2015 shouldering a large financial burden and continues to do so with this restructuring plan. The Government’s continued support of the plan is illustrated by its willingness to assume $2.4 billion of ABB’s debt on top of its previous support and provide the resulting credit enhancement to participating creditors. We believe that this proposal fairly serves the interests of the Bank’s foreign creditors and ensures its long term viability.”
Rufat Aslanli, Chairman of the Board of Directors of the Financial Market Supervision Authority, commented: “We have reviewed the ABB’s restructuring plan and we are confident that the proposed measures will help strengthen the Bank’s financial position and liquidity. As the country’s largest and systemic bank, ABB plays a fundamental role in the banking system’s overall facilitation of payments and social contributions. We believe that the proposed restructuring plan offers better outcome for both creditors and ABB, compared to other possible alternatives.”
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International media contact:
Graham Ackerman, APCO Worldwide for ABB
gackerman@apcoworldwide.com
+44 (0)7818 542 377
This press release or any information contained herein does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of ABB or the Republic of Azerbaijan.
This press release does not constitute an offer of securities for sale in the United States nor may any securities be offered or sold in the United States absent registration or compliance with an exemption from registration as provided in the US Securities Act of 1933, as amended, and the rules and regulations thereunder. There is no intention to register any portion of any offering in the United States of America or to conduct a public offering of securities in the United States of America.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.
