Creditors adopt IBA’s foreign liability restructuring plan
Baku, Azerbaijan, July 18
By Azad Hasanli – Trend:
Creditors of the International Bank of Azerbaijan (IBA) adopted a voluntary restructuring plan of foreign liabilities at a general meeting July 18, IBA told Trend July 18.
Creditors who own 94.1 percent of restructured liabilities took part in the voting process.
Thus, 93.9 percent of creditors voted for the voluntary restructuring, which is sufficient for the adoption of the plan (according to the Law on Banks, 2/3 of the creditors' votes are enough to make a decision).
The plan will come into force after approval by the Financial Market Supervisory Authority (FIMSA) and Nasimi District Court.
As a result of the restructuring, the bank will exchange current liabilities in foreign currency in the amount of about $3.34 billion for new bonds of the bank and the state, while the funds in the form of accrued but unpaid interest for the period from May 10 to September 1, 2017 will be paid to the creditors owning the senior and subordinated debt.
The Azerbaijani government supports the restructuring of IBA’s foreign liabilities by exchanging financial debts for direct sovereign liabilities of the state. As a result of this exchange, creditors will receive securities with a higher credit rating.
Among the major foreign creditors of the International Bank of Azerbaijan are US Cargill company, Citibank, Rubrika Finance Company Limited, Credit Suisse AG.
"The successful outcome of the restructuring of IBA’s foreign liabilities once again testifies that the plan meets the interests of both the bank and creditors," Azerbaijani Minister of Finance Samir Sharifov said. “The positive result of the voting will also contribute to the implementation of the Azerbaijani government's plans for privatization of the bank until the end of 2018."
“The adoption of the plan of restructuring IBA’s foreign liabilities by the majority of foreign creditors is a positive moment for the development of the banking sector,” Rufat Aslanli, FIMSA chairman, said.
"We fully support this plan, which meets all international and domestic regulatory norms," Aslanli added.
Chairman of the IBA Board Khalid Akhadov said that the voting results are a historical event for the IBA, which underpins common efforts to ensure its long-term development.
"The restructuring is a key step in the way of its recovery,” he said. “The voting result showed that along with the main shareholder of the bank and the financial regulator, the overwhelming majority of creditors supported our plan of restructuring foreign liabilities as the most appropriate decision in the current complicated situation.”
“When the restructuring process is over, the bank will continue its work with the Ministry of Finance to strengthen the balance by transferring part of the problem assets to Aqrarkredit closed joint stock non-bank credit organization in the amount of 4.9 billion manat," he said.
After the restructuring plan comes into force, the creditors will receive funds and / or new bonds (or in some cases, proceeds from the sale of new bonds) in accordance with the mechanism described in the information memorandum.
It was earlier reported that the IBA commenced a process of voluntary restructuring within its financial improvement.
A number of creditors who did not agree with the restructuring of the IBA’s foreign liabilities, appealed to the New York court, stating their non-recognition of the restructuring. The court considered the appeal and ruled in favor of IBA. Thus, the bank's assets will remain untouched in the process of restructuring.
Following the decision of the New York court, the London court also made a positive decision concerning the IBA to prevent foreign creditors’ lawsuits in the UK regarding the bank’s assets.
The International Bank of Azerbaijan has been operating since 1992 and is one of the country’s two state-owned banks.