BTA to propose restructuring at Jan. 26 shareholder meeting
* Wealth fund, central bank support move
* Restructuring will exclude depositors, trade
finance creditors
* Analysts forecast haircut of 50-80 pct, depending on state support (Adds analyst, central bank comment, details)
By Robin Paxton and
Carolyn Cohn
ALMATY/LONDON, Dec 22 - BTA, Kazakhstan's third-largest bank by assets, will propose a further debt restructuring at a shareholder meeting next month, a move seen requiring creditors to write off at least half their investment.
BTA said on Thursday shareholders would meet on Jan. 26 to decide whether to accept a proposal to restructure its debt to help the bank, majority owned by sovereign wealth fund Samruk-Kazyna, stay afloat.
"Restructuring is an urgently needed measure which, if timely ... should ensure further normal functioning of the bank, strengthen its financial position and potentially restore its position in the market," BTA said.
BTA was the largest of Kazakhstan's banks to default in 2009 when the global financial crisis hit Central Asia's largest economy, laying bare the banking sector's exposure to bloated real estate markets and an excessive reliance on external funding.
The bank managed to cut net debt by about two thirds to $4.2 billion through a restructuring programme agreed with creditors last year, which installed Samruk-Kazyna as its 81.5-percent shareholder.
BTA has relied largely on Samruk-Kazyna's support after struggling with persistent bad loans, slow growth in the non-commodity sectors of Kazakhstan's $150 billion economy and the cost of servicing its government funding package.
Samruk-Kazyna's deputy chief executive, Aidan Karibjanov, said the fund had analysed the financial situation at BTA and supported the bank's proposal to initiate restructuring of some of its debt.
In a statement published on Samruk-Kazyna's,Karibjanov said the debt restructuring would exclude depositors and trade finance creditors.
"Samruk-Kazyna hopes that a second restructuring of certain of the bank's financial indebtedness ... will bring about the required level of capitalisation of the bank," he said.
A separate source at Samruk-Kazyna, who declined to be identified, said details of the second debt restructuring would be a subject for negotiation between creditors and the bank.
"An agreement will be reached only when the general meeting approves this process. Then, the negotiations with creditors will begin," said the source, adding that the process could take around six months to complete.
HAIRCUT
Kathleen Middlemiss, who covers BTA's bonds for UBS in London, said a "back of the envelope" calculation suggested the bank might want creditors to accept a 50 percent haircut.
The base for her calculation was the amount of capital that Samruk-Kazyna would inject to "make whole" its negative equity. Without the provision of capital by the wealth fund, she said a second restructuring was unlikely to be successful.
"Should Samruk-Kazyna not be so generous, the haircut could be as much as 75 percent for shareholders," Middlemiss said.
BTA's bond due 2018 rose 0.88 cents but was still trading at very low levels of 26.88 cents on the dollar, yielding 58.561 percent -- levels comparable with Greek debt.
"Consensus estimates about the next write-off vary widely, and range from 50 percent to 80 percent," said Richard Segal, analyst at Jefferies in London.
"A lot will depend on how much of the government's and the central bank's loans are converted to equity or quasi-equity. The more the government's debt is forgiven or converted to equity, the less the bondholders will have to suffer," he said.
Kazakhstan's central bank said in a statement that it supported the initiative by BTA to restructure part of its debt, calling it a "sensible reaction".
BTA posted a net loss of 203.8 billion tenge ($1.4 billion) in the first nine months of this year. This included a net loss of 64.7 billion tenge in September alone, driven by higher bad loan provisions.
BTA said in the statement the proposed restructuring would relate to liabilities to creditors under outstanding obligations entered into during the restructuring completed in 2010.
"I have never been involved in a second round of restructuring in my career," said a London-based corporate debt strategist. "This is going to be the first and we'll have to see what happens."
COUPON DUE
He said the market was focusing more on whether BTA would make a coupon payment due in early January and that while the proposed debt restructuring "ought to be good news for the coupon payments, it's by no means certain".
BTA said its next coupon payment of around $150 million was due by Jan. 3. The bank declined to comment on its ability to make this payment.
Investors have been concerned before about BTA's ability to meet coupon payments, but the bank met a $166.4 million payment in July and repaid a $175 million instalment of a trade finance loan in September.
A parliamentary election in Kazakhstan, scheduled 11 days before the BTA shareholders' meeting, will also have a bearing on the fate of the bank.
"The decision on the fate of BTA bank will be taken not by the existing government but by the new government that will be formed after the parliamentary elections," said Almaty-based political analyst Dosym Satpayev.
Authorities in Kazakhstan have amended legislation to pave the way for a multi-party parliament. Ruling party Nur Otan holds all 98 elected seats in the lower chamber and is widely expected to win an overwhelming majority in the next election. (Additional reporting by Mariya Gordeyeva and Olga Orininskaya in Almaty; Editing by Greg Mahlich)
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