PrivatBank informs trustee for 2018 eurobonds bank has no obligations under securities

PrivatBank (Dnipro) officially informed Deutsche Trustee Company Limited, a trustee on 2018 eurobonds, that the bank does not have any obligations under the securities, according to a report on the website of the London Stock Exchange.

"In response to your letter of February 8, 2017 please be informed that PrivatBank has no more obligations under the eurobonds on $175 million with a coupon rate 10.875% per annum and maturing in 2018, as well as eurobonds for $200 million with a coupon rate of 10.25% per annum and maturing in 2018. As we have previously notified you in a letter dated January 5, 2017, the obligations under the eurobonds were disposed of by the Individuals Deposit Guarantee Fund, December 21, 2016 during action of temporary administration in the bank. Thus, PrivatBank received the balance from the fund without these commitments," PrivatBank said in a response to Deutsche Trustee Company.

As reported, as part of the nationalization of PrivatBank, its obligations to a Special Purpose Vehicle (SPV, Britain), the issuer of eurobonds, was subject to bail-in procedures and were exchanged for the bank's additionally issued shares.

Later the Individuals Deposit Guarantee Fund that introduced temporary administration at the bank, sold all the bank's shares to the state for UAH 1.

The bailed-in notes are as follows: $175 million 10.875% senior unsecured loan participation notes due February 28, 2018, $200 million 10.25% senior unsecured loan participation notes due January 23, 2018 ($40 million was paid in August 2016), and $220 million 11% subordinated loan participation notes due 2021.

UK SPV Credit Finance Plc registered in Britain issued the notes due in January and February 2018. The notes due 2021 were issued via ICBC Standard Bank Plc (Britain), but during restructuring the debt were re-registered to UK SPV Credit Finance Plc.

According to the conditions of the issue of notes due February 2018, the issuer would provide the funds raised after the placement of the notes as a debt to PrivatBank. The securities have limited resource.

According to the document, if the bank is declared insolvent, the bank is transferred to the management of the Individuals Deposit Guarantee Fund. The fund appoints a temporary administrator to the bank who is authorized to take any steps to restore solvency of the bank.

At the end of December 2016 the holders of more than 20% of eurobonds in nationalized PrivatBank united in an ad hoc committee for the common protection of their rights and interests after the exchange of their securities for the additionally issued shares of the bank. The committee consists of five funds, including British, American and Swiss, holding different issues of securities for a total of more than $120 million.

Holders of eurobonds of nationalized PrivatBank seek to challenge the forced exchange of their securities to the additionally issued shares in the London Court of International Arbitration (LCIA).