Ukraine's VAB Bank begins consent solicitation for 10 1/8% notes

By Angela McDaniels

Tacoma, Wash., March 8 - OJSC Vseukrainsky Aksionerny Bank announced a consent solicitation for the $122 million outstanding principal amount of 10 1/8% loan participation notes due June 14, 2010 issued by Credit Suisse International to fund a loan to the bank.

Noteholders are being asked to consent to the following changes:

• The replacement of Credit Suisse International as the issuer of the notes and the lender under the loan with VAB Finance No. 1 Ltd.;

• An extension of the maturity date of the notes and loan to June 14, 2014;

• An increase in the interest rate for the notes and loan to 10½%;

• A change in the frequency of the coupon payments to quarterly from semiannually;

• The addition of a partial redemption under the notes and loan;

• An amendment to the definition of "permitted liens" in the loan agreement to increase the maximum permitted principal amount of debt secured by liens at any one time to 20% of the group's assets from 15%;

• An amendment to the form of the permanent global note and the definitive note so that the only instance in which noteholders may exchange their interests in the permanent global note for a definitive note would be in the event that the clearing systems permanently go out of business without a successor; and

• A decrease in the minimum denomination of the notes to $90,000 from $100,000.

The bank said it is seeking to replace the issuer because Credit Suisse wants to resign as the lender under the loan agreement.

Noteholders will vote on the proposed changes at a meeting at noon ET on March 22 in London.

A quorum of at least two-thirds of the outstanding notes must be represented in person or by proxy at the meeting, and at least three-quarters of the votes cast must be in favor of the changes in order for the extraordinary resolution to pass.

If the extraordinary resolution passes, those who voted in favor of the changes prior to 8 a.m. ET on March 19 will have 10% of their notes redeemed on the original maturity date.

All holders will receive accrued interest on the original maturity date. Interest will accrue at the new rate, if approved, beginning on the settlement date, which is expected to be March 29.

The bank noted that it must register the amendments to the loan agreement with the National Bank of Ukraine. If they are not registered before the settlement date, the amendments will not take effect.

VAB Finance No. 1 has agreed to convert to a public limited company prior to the meeting.

The solicitation agent is UBS Ltd. (+44 0 20 7567 0525 or mark-t.watkins@ubs.com).

The issuer is a Ukrainian financial institution and a member of the Kiev, Ukraine-based universal financial group VAB Group.

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