Privatbank asks bondholders to reveal beneficiaries as part of its defense

Hong Kong-based Madison Pacific Trust Ltd., the new
trustee of Privatbank (PRBANK) notes maturing in January and February 2018,
informed bondholders on Aug. 14 that the bank requests that they identify their
notes’ beneficiary owners on the date of their acquisition. This is part of the
bank’s defense tactics against the claims of trustee, on behalf of bondholders,
to repay the bonds, the trustee said in its statement. In particular, if the
holders won’t indentify themselves, the bank may infer that “some or all of the
Notes were acquired in circumstances involving illegality.” The trustee also
mentioned that “no such inference is appropriate,” while at the same time not
ruling out that the failure of the bondholders to show up will weaken the
prospects of their claim. The bondholders “should take and rely on their own
independent legal and financial advice,” the trustee commented.

Recall, Privatbank was declared insolvent and
nationalized by the Ukrainian government in December 2016. Before the
nationalization, three issues of Privatbank Eurobonds, USD 555 mln outstanding,
were bailed-in (converted into equity which was then fully diluted). In
November 2017, the holders of two note issues of USD 335 mln outstanding sued in London against the bail-in.

Alexander Paraschiy: It looks like the bank is trying to claim that most of the holders of
its Eurobonds are related to former shareholders of the bank, which is not the
case, as to our knowledge. If that’s the cornerstone of the bank’s defense,
then the entire defense position does not look strong. At the same time, such
requests will definitely play to delay the court hearing.