Alfa Bank Ukraine presents its debt restructuring offer

Yesterday Alfa Bank Ukraine sent its Eurobond holders an offer to restructure the existing notes.Alfa proposes to pay upfront 27% of the face value of 2009 notes and 15% of the face value of 2010 notes and exchange the remaining portion of principal for new notes, if bond holders accept the exchange offer before July 14. If the offer is accepted after July 14 but before the offer expiration date on July 21, the existing notes will be replaced with the new ones without any upfront cash payment. With regard to the 2011 issue, Alfa proposes to remove put option and instead embed a call option. The bank offers a 27% cash payment and exchange of the rest of the principal for new notes if the offer is accepted before July 14, and 10% cash payment and exchange of the remaining principal for new bonds after that date, subject to a call option exercise. Noteholder meeting for 2011 bonds is scheduled for July 16, and note holder meeting for 2009 and 2010 issues is on July 23. Andriy Gostik: The news comes as a confirmation of our surmise expressed in our May, 05 note that Alfa will most likely be seeking to restructure its outstanding debts. We expect a downward pressure on the prices of 2009 notes and 2011 notes puttable this August to mount following the restructuring announcement, and recommend to decrease exposure to the securities. For more details see our flash note later today.