Page 22 - bne IntelliNews newspaper 14 July 2017

Eurasia
July 14, 2017 www.intellinews.com I Page 22
IBA's debt restructuring plan approved by 87% of creditors
bne IntelliNews
The International Bank of Azerbaijan (IBA) has se- cured the support of more than 87% of its credi- tors for a proposed debt restructuring plan, the lender announced in a statement on July 12.
IBA, Azerbaijan's largest bank, announced plans to restructure $3.3bn in foreign debt in May after incurring losses of some $1.4bn in 2016. The initial debt restructuring plan, which swapped the bank's sovereign obligations but entailed significant cuts in principals and long maturity rates, angered creditors, some of whom submitted a complaint in a US court against the lender. IBA made some changes to the plan in June, and it appears that this time, investors have largely endorsed it.
If they had rejected the plan, the government- owned bank could have initiated insolvency procedures, which would have resulted in even greater losses for creditors. Approving the plan was, therefore, the only chance for creditors to get some of their money back.
Creditors have endorsed the plans to restructure the $3.3bn foreign debt owed by Azerbaijan's largest bank, preventing it from having to initiate insolvency proceduresa
IBA's default on its foreign obligations in May came as a shock, seeing how the bank is govern- ment owned - and the Azerbaijani government had given repeated verbal reassurances to credi- tors that it would support the lender as recently as January - and because the bank had been rescued from default once before, in 2015.
Creditors are to meet on July 18, when IBA will be able to communicate a final result of the meeting. However, some of the holders of its eurobonds could still challenge the vote in court after that date.
IBA's largest foreign creditors included in the plan are Azerbaijani oil fund Sofaz, the trading finance arm of American food giant Cargill and the hold- ers of its $500mn eurobond. Creditors have com- plained that including Sofaz in the restructuring plan tilted the balance in IBA's favour, as the fund accounts for a third of total debt and IBA only needs support from two-thirds of investors for
the plan to succeed.
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