Baku, 18 July 2017 – OJSC The International Bank of Azerbaijan (the “Bank” or “ABB”) is pleased to announce that its Restructuring Plan was today approved by its creditors at the Claimants’ Meeting.
The Restructuring Plan, which relates to approximately U.S.$3.34 billion in principal amount of the Bank’s Designated Financial Indebtedness, was approved at the Claimants’ Meeting in Baku by Claimants holding 93.9 per cent. of the aggregate principal amount of Claims subject to the Restructuring. Under the Azerbaijan Law on Banks, the plan needed to be approved by Claimants holding at least two-thirds by value of the Claims. Claimants holding 94.1 per cent. of the aggregate principal amount of Claims subject to the Restructuring cast their votes at the Claimant’s Meeting. The Restructuring Plan will take effect once it has received the approval of the Financial Market Supervision Authority and the Nasimi District Court of Baku.
As a result of the Restructuring, Designated Financial Indebtedness in the amount of approximately U.S.$3.34 billion will be cancelled, in return for which Claimants will receive a combination of:
- cash representing accrued and unpaid interest that falls due in the period between 10 May 2017 and 1 September 2017 (in the case of eligible Claimants in respect of Senior Liabilities and Subordinated Liabilities);
- newly issued bonds of the Bank; and/or
- newly issued bonds of the Republic of Azerbaijan.
The Republic of Azerbaijan is supporting the transaction through the exchange of certain of the Bank’s Designated Financial Indebtedness for direct sovereign obligations of the Republic, thereby providing credit enhancement to the Claimants receiving such sovereign obligations given the country’s higher credit rating.
As a consequence of the elections made in the course of the voting process by the holders of Senior Liabilities (1.7% for option 1, 50.2% for option 2 and 48.1% for option 3), Claims of certain holders of Senior Liabilities voted after July 4 (including part of the Claim of SOFAZ), together with the claims of holders of Senior Liabilities who did not vote or who voted against the Restructuring Plan, will be subject to the reallocation mechanism described in the Information Memorandum.
Samir Sharifov, Minister of Finance of Azerbaijan, said: “The satisfactory outcome of ABB’s restructuring demonstrates that the plan supported by the Ministry of Finance serves the long-term interests of the Bank and of its creditors, who overwhelmingly approved it. The success of the operation will also facilitate the Government of Azerbaijan’s objective of privatising ABB by the end of 2018.”
Rufat Aslanly, Chairman of the Board of Directors of the Financial Market Supervisory Authority of Azerbaijan (FIMSA), added: “The restructuring plan for ABB – as proposed by the Bank and voted for by its creditors – is a positive development for Azerbaijan’s banking sector. The plan meets all regulatory requirements, domestic and international, and commands our full support.”
Khalid Ahadov, Chairman of ABB, noted: “Today’s results mark an important day for the Bank and our efforts to ensure its long-term viability. The restructuring was a lynchpin in this process and we are now in a much better position to return to financial health. The high approval rate indicates that our creditors overwhelmingly agreed with the Bank’s view – shared by our principal shareholder and our financial regulator - that the restructuring of the Bank’s financial indebtedness was the best way forward during this challenging time. Upon completion of the restructuring, the Bank will be in a position to work with the Ministry of Finance to continue strengthening the balance sheet of the Bank by completing the transfer of certain impaired assets to Aqrarkredit for a total value of AZN 4.9 billion.”
Once the Restructuring Plan becomes effective, each Claimant will be allocated a package of Entitlements consisting of cash and/or New Notes (or in certain circumstances the cash proceeds from the sale of New Notes), all as described in the Information Memorandum.
As a reminder, Claimants (other than Noteholders) have until 4.00 p.m. (London time) on 22 August 2017 (the “Deed of Release Delivery Deadline”) to submit a duly executed Deed of Release in respect of their Claims that are subject to the Restructuring. If a duly executed Deed of Release is not received by the Deed of Release Delivery Deadline, the distribution of Entitlements to the relevant Claimant will not be made on the initial distribution date, which is currently expected to be 1 September 2017, but at such later date after the delivery of a duly executed Deed of Release as ABB may determine in its sole discretion.
The Bank’s financial adviser for the Restructuring is Lazard and its legal adviser is White & Case LLP.
Terms used in this press release and defined in the Information Memorandum of the Bank dated 19 June 2017, as amended and/or supplemented from time to time, are used in this press release as so defined.
International media contact:
Graham Ackerman, APCO Worldwide for ABB
gackerman@apcoworldwide.com
+44 (0) 7818 542 377
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