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BTA dismisses default talk as Alliance falls

17.04.2009 /  Euroweek Issue: 1100 

The chief executive of Kazakhstan’s BTA Bank, Anvar Saidenov, this week insisted creditors had not demanded early repayment of their debt and that he was confident of his bank’s access to liquidity. Separately, its rival, Alliance Bank, announced that it was seeking a standstill agreement from its creditors.

EuroWeek had been told that three major banks — a Japanese, a German and a UK institution — asked for accelerated repayment on bilateral dollar loans. BTA, which has some 140 facilities including trade finance, bilateral loans, Eurobonds and syndicated loans, has not honoured these requests, alleged an emerging markets origination banker in London.

If what the banker says is true and their requests have not been met by BTA, a cross-default on the bank’s 140 loan facilities could theoretically be triggered. But Saidenov dismissed these claims. He told EuroWeek there were no outstanding claims from creditors for acceleration of debt repayment, despite the fact that SamrukKazyna took a majority stake in the bank in February, implying a change of control event that could potentially trigger accelerated repayment of debt.

"The change of control was a matter of discussion immediately after the arrival of SamrukKazyna and the position of creditors is quite realistic and responsible," Saidenov said. BTA board chairman Arman Dunayev, warned last month that the Kazakh government may stop supporting BTA if creditors demand early repayment. "If any of the creditors ask for early debt repayment, SamrukKazyna may review its attitude towards supporting BTA group," Dunayev said. "That is an accurate representation of SamrukKazyna’s position," said Saidenov, commenting on the government’s stance. "It is against the interests of creditors to accelerate."

BTA has repaid $1.4bn of external debt so far this year and has another $2bn of foreign debt maturing — including interest payments — in 2009, split between public eurobonds, bilateral loans and syndicated loans.

"We are confident that in terms of liquidity, we will be able to service this debt," said Saidenov. "SamrukKazyna has bought new BTA shares, placed deposits directly in the bank and arranged for subsidiaries of SamrukKazyna to place deposits with the bank. BTA is also a major entity for the implementation of the government’s economic support package."

Restructuring plan

BTA hired UBS last week to advise it on a possible debt restructuring. Goldman Sachs is already working for the bank and is in the final stages of due diligence work "UBS will look at our external obligations and come up with proposals for optimising or reducing our debt structure," Saidenov said. "We decided to appoint UBS because they have a broader distribution network among holders of BTA debt."

The bank’s results are expected in early May but, according to Saidenov, non-performing loans are at 9.5%.

Real estate debt, which comprises 40% of the bank’s loan portfolio, is most vulnerable to default although government programmes to help refinance mortgages are expected to bring down the level of non-performing mortgages.

A government-sponsored distressed asset fund of up to Kzt60bn is also being prepared but the types of assets that will be eligible have not yet been decided.

Saidenov also insisted that talks with Sberbank, which is contemplating buying a stake in BTA from SamrukKazyna, were continuing, despite reports the Russian retail bank had lost interest. Sberbank was reported to have been deterred by BTA’s complex and fragmented ownership structure under which the Kazakh parent bank is not in full control of assets outside the country in markets such as Ukraine.

"Negotiations are continuing," said Saidenov. "Next door to us right now is the deputy chairman of Sberbank. The due diligence is continuing and only on the basis of the due diligence will we be able to move onto concrete negotiations."