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Monday 23 November, 2009

Temirbank JSC

Restructuring approved by the

RNS Number : 9000C
Temirbank JSC
23 November 2009
 



PRESS RELEASE


SUBSIDIARY OF JSC BTA BANK - JSC TEMIRBANK ( "JSC TEMIRBANK")

TEMIR CAPITAL B.V.


23 NOVEMBER 2009


JSC TEMIRBANK'S APPLICATION FOR RESTRUCTURING APPROVED BY THE COURT

DEFAULT ON INTEREST DUE ON TEMIR CAPITAL B.V. INTERNATIONAL BONDS

DEPOSITORS NOT AFFECTED

SUMMARY

JSC Temirbank has obtained the agreement of the Agency of the Republic of Kazakhstan on the Regulation and Supervision of the Financial Market and Financial Organisations (the "Agency") and the approval of the Specialised Financial Court of Almaty for a restructuring plan for JSC Temirbank. The plan will involve the restructuring of the international bond guarantees and domestic bonds, certain trade finance-related transactions and certain related-party obligations of JSC Temirbank.

All retail and commercial deposits (with the exception of certain related party deposits) and the bank's other operating liabilities, including advisors' fees will be excluded from the restructuring. Deposits will continue to operate in the normal way and will not be subject to any discounting or adjustment as a result of the restructuring.

Individual depositors continue to be protected under the state system of mandatory guarantees of deposits. In accordance with the relevant legislation of the Republic of Kazakhstan, the bank deposits of individuals in JSC Temirbank and other second tier banks are currently guaranteed up to the amount of KZT 5 million.  

On successful completion of the restructuring, JSC National Welfare Fund "Samruk-Kazyna" will provide equity funding to JSC Temirbank and become the majority shareholder of JSC Temirbank.

FURTHER INFORMATION

The September 2009 and October 2009 compliance reports of the Agency (published on the Agency's website www.afn.kz) showed JSC Temirbank failing to meet the minimum regulatory capital and liquidity requirements set out in the Instruction on the Standard Values and Methodology of Calculation of Prudential Standards for Second-Tier Banks, approved by Resolution No. 358 of the Management Board of the Agency, dated 30 September 2005 (the "Instruction"). 

Given the substantial deterioration in the quality of the loan portfolio, and, as a result, in the regulatory capital position of JSC Temirbank shown in the October 2009 compliance report, the Agency is entitled to withdraw the banking licence of JSC Temirbank but has agreed not to do so on condition that JSC Temirbank takes urgent steps to secure its satisfactory recapitalisation and other steps to remediate the position of JSC Temirbank by the end of December 2009. The agreement with the Agency severely restricts the operations of JSC Temirbank, including prohibiting it from advertising for deposits (but not from operating existing deposit accounts in the normal way), until such time as a satisfactory restructuring is completed. The Agency has already required JSC Temirbank to surrender its licence (No. 0407100254) for custodial activity on the securities market.

Citigroup Global Markets Limited has been appointed as Bond Process Adviser to assist JSC Temirbank in the implementation by it of strategies to achieve the restructuring of JSC Temirbank's debt and recapitalisation of JSC Temirbank to the satisfaction of the Agency.

The worsening financial position of JSC Temirbank led to JSC Temirbank defaulting on Friday 6th November 2009 on the payment of KZT 5,8 bln (including interest and principal amount), as well as on Monday 9th November 2009 on the payment of KZT 1.9 bln due to its major shareholder JSC BTA Bank under deposit agreements between JSC Temirbank and JSC BTA Bank and will mean that Temir Capital B.V. will not be able to pay (i) the US$23.6 mln of interest due on 23rd November 2009 on the senior notes issued pursuant to its US$1,200,000,000 Global Medium Term Notes Issuance Programme (the "MTN Notes") or (ii) the US$12.6 mln of interest due on the 24th November 2009 on the US$300,000,000 9 per cent Senior Notes due 2011 (the "Standalone Notes"). 

No payments of interest (including default interest) or any principal due in relation to the debt that is to be restructured will be made from today's date. Interest accruing between today's date and the restructuring date will be part of the restructuring.  

JSC Temirbank will provide further information on the proposed restructuring on its website and via other public channels once it becomes available.  

Approval of the restructuring plan by the Specialised Financial Court of Almaty has triggered a moratorium suspending any claims against JSC Temirbank and prohibiting foreclosure on JSC Temirbank's property. No claim acquired on or after the date of this press release can be set off against any amount due to JSC Temirbank by a creditor.



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