Privatbank USD 175 mln noteholders to consider trustee change

Holders of Privatbank’s (PRBANK) USD 175 mln of notes maturing in January 2018 are invited to a meeting on June 5 to approve the changing of their trustee, the bank’s British SPV announced on May 15. The notes’ current trustee, Deutsche Trustee, has declared its intention to resign. The noteholders will consider appointing Madison Pacific Trust as a new trustee. The new trustee shall be appointed by no less than 75% of bondholders present at the meeting. The meeting’s quorum is 50% of amount of the notes outstanding, while there is no quorum for a possible adjourned meeting.

The new trustee will receive monthly charges of up to USD 12,500 per month, while any costs/fees in excess of this amount will be accrued and payable only if holders of two Privatbank bonds maturing in 2018 (with a total par value of USD 335 mln) will recover more than USD 100 mln.

All Privatbank Eurobonds, with total par value of USD 545 mln, are in default as the bank does not recognize any obligation on these notes. The bonds were bailed-in during the bank’s nationalization in December 2016. Namely, after the bank was recognized insolvent on Dec. 19, all its Eurobonds were exchanged into bank equity by Deposit Guarantee Fund. After that, the Fund passed 100% of the bank’s equity to Ukraine’s Finance Ministry.

Alexander Paraschiy: If a new trustee is appointed, we should expect some certain moves from it to try recover Privatbank Eurobonds – possibly via the initiation of international court claims against the Ukrainian government. At this stage, it is hard to estimate the success of such an initiative. But the payment principle for the new trustee implies that the initiators of the meeting are targeting to recover more than USD 100 mln of Privatbank 2018 Eurobonds, or more than 30% of the amount outstanding.