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BTA Bank Successfully Completes The Restructuring of US$16.7 Billion of Financial Indebtedness

01.09.2010

Almaty, September 1, 2010 – “BTA Bank” JSC (the “Bank”) is pleased to announce the successful completion of the Restructuring relating to US$ 16.7 billion of the Bank’s financial indebtedness (the “Restructuring”). On August 31, 2010, the Specialised Financial Court of Almaty (the “Court”) issued an order terminating the Restructuring on the basis of submissions confirming the successful completion of all procedures set out in the Restructuring Plan of the Bank (the “Restructuring Plan”).

The distribution of cash, new notes and equity to creditors which was commenced on 26 August 2010 was substantially completed on 31 August 2010. The Bank of New York Mellon, London Branch as the distribution agent is presently working on completing some trades that have not settled.

As part of the Restructuring all of the existing financial indebtedness of the Bank has been cancelled and in consideration thereof the Bank distributed to creditors cash in the amount of US$945 million and the following new debt securities: Senior Notes in the amount of US$2.3 billion, OID Notes in the amount of US$429 million, Subordinated Notes in the amount of US$773 million and Recovery Units in the amount of US$5.2 billion. The Bank also entered into a Revolving Committed Trade Finance Facility Agreement for the amount of US$698 million and issued 44 175 794 956 common shares distributed under the form of Shares or GDRs.

The Bank’s restructuring has the following effects:

  • the Bank has been recapitalised by approximately US$11.3 billion as a result of (i) the conversion of US$5.6 billion of the Bank’s financial indebtedness into common shares and the distribution of shares and GDRs to claimants allocated to senior packages 1 and 2 and (ii) the cancellation of US$10.8 billion of other creditors’ claims in exchange for a total of US$5.1 billion of cash and new notes issued by the Bank;
  • the Bank’s equity of KZT108.8 billion and regulatory capital of KZT286.1 billion, provide the Bank’s business with a new, sustainable capital structure with K1-1, K1-2 and K2 ratios of 11%, 10.7% and 14.6% respectively, meeting the FMSA’s prudential requirements;
  • the financial debt of the Bank has been reduced from approximately US$16.7 billion to approximately US$4.1 billion and its maximum maturity profile was extended from 8 to 20 years;
  • Samruk-Kazyna has increased its majority shareholding position in the Bank with a 81.48% ownership stake, with the Bank’s creditors holding in aggregate 18.5%; and minority shareholders who held shares prior to the Restructuring now holding 0.02% in aggregate of the Bank’s shares.

According to the Bank’s unaudited and non-consolidated financial statements prepared in compliance with Kazakh accounting standards, as of August 31, 2010 the Bank’s assets totaled KZT1 952.9 billion (including KZT665 billion loans to customers), liabilities totaled KZT1 844.1 billion and its net income for the first 8 months of 2010 amounted to KZT1 090.9 billion.

As part of the terms of the Restructuring Plan, the membership of the Bank’s Board of Directors changed due to the appointment of two “Creditor Directors” nominated by the Steering Committee of the creditors. The Creditor Directors were appointed to the Board of Directors to represent holders of the newly issued debt securities of the Bank. As previously reported, pursuant to the resolutions of the extraordinary general meeting of the Bank’s shareholders held on August 19, 2010, the appointment of independent director Mr. Ulf Wokurka was terminated, along with those of Mr. Yerlan Tatishev and Mr. Kairat Aitekenov as members of the Board of Directors. At the shareholders’ meeting Mr. Christoph Shoefboeck and Mr. Maarten Leo Pronk were appointed to the Board of Directors as Creditor Directors and Mr. Bulat Babenov to the Board of Directors was appointed as an independent director.

Following the successful completion of the Restructuring, the Bank intends to concentrate on active business development and restore its leading domestic pre-crisis positions. The medium-term business strategy of the Bank is that it will retain its universal nature and focus on the domestic market, aiming to achieve by 2014 a loan portfolio comprising 50% share of corporate business, 30% of small and medium business and 20% of retail business.

The funding strategy of the Bank also focuses on internal markets and looks to an active increase in deposits from both the retail and the SME and corporate sectors. By 2014 the Bank hopes to have doubled its deposit base from 2008 levels.

In the corporate business segment, the Bank is intending to improve the quality of its loan portfolio, diversify risk and increase efficiency and the return on its loan portfolio. Moreover, the Bank intends to continue working on the recovery of its collateral base and misappropriated assets in close cooperation with its legal and financial advisors.

In the small and medium sized business sector, the Bank will continue participating in the DAMU Fund state support programmes.

In the retail business sector, the Bank is intending to increase its loan portfolio by 14% per annum on average.

Mr. Anvar Saidenov, Chairman of the Management Board believes that the successful completion of the Bank’s Restructuring will lead to a long-awaited end to the uncertainties in the Kazakh banking sector and will be positive for both domestic and foreign investors.

“BTA Bank has been building up to this moment for nineteen months. Tremendous work has been done by all Bank’s departments and advisors. Today we are happy to realize that all of the efforts to rescue BTA Bank have been crowned with success. The restructuring of the Bank’s liabilities is over now, but we are not going to stop. We have a complicated but interesting task ahead of us to restore BTA’s positions. I am positive that all our efforts will be successful. I express my gratitude to all our customers, partners, investors, shareholders and all staff members of BTA for their trust and support during these difficult times”.

BTA Bank also expresses its gratitude to the creditors’ Steering Committee for its help and support during the restructuring process.

The Bank’s financial advisors in the restructuring were Lazard Frères and UBS AG and its legal advisors were White & Case LLP. The Bank’s independent advisors in the restructuring and the assets recovery strategy are M.Favale-Tarter, LLC and John Howell & Co respectively.

Media contacts:

Kalamkas Tuleshova

Tel.: +7 (727) 266-47-99
Fax. +7 (727) 250-12-55
Email: tuleshova@bta.kz
www.bta.kz