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Update on the restructuring process; preliminary talks with stakeholders have started

16.01.2012

Almaty, January 16, 2012 – “BTA Bank” JSC (the “Bank”) thanks its GDR holders and creditors for attending the meetings and for the constructive approach that was demonstrated during the investors’ presentations organized by the Bank in Brussels, Frankfurt, Geneva, London, Miami, Munich, New York and Stockholm on January 11 and 12.

Around 130 people, representing 70 financial institutions, attended the meetings, during which the Bank presented its current situation and detailed the decisions that shareholders will need to take at the General Shareholders’ Meeting on 26 January 2012.

The Bank is pleased to confirm that it plans to enter into consensual negotiations with its stakeholders with a view to developing a Restructuring and Recapitalization Plan under Kazakhstan law that could ultimately be submitted to all relevant bodies for approval. To this end, it will hold preliminary discussions with creditors during the week of 23 January with a view to preparing for the engagement of a Steering Committee.

As mentioned during the meetings, and to facilitate the formation of a representative Steering Committee, the Bank invites holders of its Senior, OID, Subordinated Notes and Recovery Units to identify themselves and disclose their holdings to its financial adviser, Lazard Frères, as soon as practicable, by sending an e-mail to the following address: BTA.Noteholders@lazard.fr.

The Bank would like to repeat its assurance that the possible restructuring will in no way prejudice the interests of the depositors. The Bank’s obligations to depositors will be fully honoured and it will continue to service deposit transactions, credits, make money transfers for all its customers and handle payment card transactions as usual.

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At the meetings a number of investors raised various points which were answered by the Bank and its advisers. The Bank would like to take this opportunity to repeat those answers and clarifications.

Supermajority Resolutions

The Bank has asked its GDR holders and other shareholders to vote at the General Shareholders’ Meeting to be held on 26 January in favour of a number of resolutions not only because it is critical to have their support in order to be able to conduct a successful restructuring process but also because under its Charter certain of those resolutions need to be passed by a Supermajority at a General Shareholders’ Meeting. Please note that for these purposes a Supermajority means, in essence, a majority including two thirds of the GDRs which vote at the meeting. Some have commented that the requirement is that two thirds of the GDRs as a whole have to support the relevant resolution. That is not correct: it is only two thirds of the GDRs who actually vote. Therefore, if two thirds of the voting GDRs vote in favour of a resolution, it will be passed.

Second GDR Holders' vote on the Restructuring

Two of the resolutions on the agenda for the General Shareholders’ Meeting, relate to the proposed restructuring. That is because under the Bank’s Charter certain components of the restructuring process need Supermajority approval. The resolutions are broadly worded because it is difficult to predict in advance the detailed restructuring process. However, as indicated above, part of that process is the engagement of a Steering Committee representing key stakeholder interests. Following the engagement of the Committee and successful negotiation of a restructuring plan, that plan will be submitted for approval both to a further General Shareholders’ Meeting (by a Supermajority) and at a creditors' meeting. This means that for the restructuring plan to become effective the consent of the both the affected creditors and the GDR holders will be required. Therefore, the purpose of these resolutions is only to show shareholder support for the initiation of the process. We will also need shareholder support for the actual restructuring plan and that will be sought at a further General Shareholders’ Meeting.

The Restructuring itself

Following the engagement of the Steering Committee, the Bank and the Committee will, with the involvement of Samruk-Kazyna as one of the Bank’s key stakeholders, proceed to negotiate an orderly restructuring of certain of the Bank’s assets and liabilities, with a view to achieving a satisfactory restoration of the Bank's IFRS capital position. Which liabilities will be restructured and how they will be restructured and the weighting to be given to them in the resulting creditor vote will be part of that negotiation and at this point the only liabilities ruled out of the process are the Bank’s customer deposits and its liabilities to employees, ordinary trade creditors and other creditors such as those excluded from the 2010 restructuring.

The moratorium resolution

The Chairman’s letter of 23 December explained why it was not in the interests of the Bank’s shareholders to pay the interest due on 3 January and that shareholders would be asked to approve that non-payment. Related to this the Bank’s Charter requires Supermajority approval of any moratorium on the payment of the Bank’s debts. Such a moratorium may be appropriate in the future but for the moment, none has been declared. Therefore, what this resolution does is approve the non-payment of interest and in effect authorises the Bank’s Management Board to impose a formal moratorium on payments on selected classes of debt should the Bank’s situation merit that.

Amendments to the Charter

As the Bank has explained in previous releases and in materials made available for the General Shareholders’ Meeting, both the Creditor Directors have resigned and as a result it is not possible for the Bank to hold a quorate meeting of its Board of Directors. That will be a major problem for all stakeholders unless something is done to remedy it. The resolution amending the Charter does this and the materials the Bank has made available explain in more detail what is proposed. However, the Bank would like to reassure all stakeholders that if the Charter is amended as requested, the Bank will only use the flexibility this gives to carry on its business as normal, to prepare for the restructuring and to pursue Recoveries. Outside these three areas, the Bank will postpone decisions until the new Creditor Directors have been appointed or another governance structure has been established. The process for nominating new Creditor Directors has already started but may take two to three months.. Until then, without the proposed amendments to the Charter, the Bank will be limited in its activities and may not be able to pursue Recoveries effectively.

Investor Relations

Tel: +7 (727) 266 26 03
Fax: +7 (727) 250 02 04
web: www.bta.kz