Russian Standard seeks to make 10¾% notes count as tier 2 capital

By Susanna Moon

Chicago, Nov. 26 – Russian Standard Finance SA said it set a meeting on Dec. 18 in London for holders of its $350 million 10¾% loan participation notes due 2018 to improve the treatment for regulatory capital purposes of the notes.

The changes will make the debt fully compliant with the requirements for tier 2 capital recognition. As part of the changes, the interest rate will increase to 13%.

The notes were issued as series 11 notes under the $2.5 billion program for the purpose of financing loans to JSC Russian Standard Bank.

The company is asking holders to approve the modification of the subordinated loan agreement dated Oct. 8, 2012 and addition of a clause that provides that if a write-down has occurred, any accrued interest on the subordinated loan will not be paid, according to a company notice.

No interest will accrue as long as a write-down is continuing.

Also, if a write-down has occurred, the company said its obligations under the subordinated loan agreement to repay the principal amount will be terminated in full or in part.

After the par amount has been written down, it may not be restored under any circumstances, even if the write-down is no longer continuing.

Noteholders will be deemed to irrevocably waive their right to receive and no longer have any rights against the issuer for repayment of the principal amount of the notes and accrued interest.

All references in the Regulation S global notes and the Rule 144A global notes to “10¾%” will be deleted.

Holders will be asked to amend

• Paragraph 8 of the issue terms to read April 10, 2020;

• Paragraph 9 of the issue terms to read (i) until but excluding the date of the amendment, 10¾% per year and, (ii) from and including, 13% per year fixed rate;

• Paragraph 14(i) of the issue terms to read (i) until but excluding the date of the amendment, 10¾% per year and, (ii) from and including, 13% per year, payable semiannually;

• Paragraph 14(iii) of the issue terms to read (i) until but excluding the date of the amendment, $53.75 per calculation amount and, from and including, $65.00 per calculation amount, in each case, subject to the application of any write-down measure under clause 8 of the loan agreement;

• Paragraph 16 of Part B of the issue terms to read (i) until but excluding the date of the amendment, 10¾% per year and, (ii) from and including, 13% per year. The yield is calculated at the issue date on the basis of the issue price. It is not an indication of future yield, the press release noted.

In order to form a quorum there must be holders representing at least two-thirds of the outstanding notes. In order for the measure to pass, the company must obtain a majority of at least 75% of the votes cast.

Russian Standard will pay a fee of $50 per $1,000 principle amount for consents delivered by the early consent deadline of 11 a.m. ET on Dec. 11 and $10 per $1,000 for consents delivered after that date but before the expiration of 10 a.m. ET on Dec. 16.

HSBC Bank plc is solicitation agent (+44 207 992 6237, email liability.management@hsbcib.com). The tabulation agent is Lucid Issuer Services Ltd. (+44 20 7704 0880, email to rsb@lucid-is.com, fax +44 (0) 7067 9098, attn.: David Shilson/Victor Parzyjagla).

The principal paying agent is Deutsche Bank AG, London Branch (fax +44 20 7547 0916, email to TSS_REPACK @list.db.com, attn.: Trust & Agency Services).

Russian Standard is a Moscow-based lender.

© 2015 Prospect News.
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