RBC Group Executed Debt Restructuring Agreements with Key Creditors
OREANDA-NEWS. April 06, 2010. OJSC RBC Information Systems (the “Company”) and RBK Investments (Cyprus) Ltd (together with the Company and affiliates referred to as “RBC” and “RBC Group”) have executed legally binding settlement agreements (the “Agreements”) with the initiative group of RBC creditors comprising OJSC Alfa-Bank, OJSC MDM-Bank, Deutsche Bank AG, CLN Recovery Limited and CJSC Gazenergoprombank (together referred to as the “Initiative Group”).
The Agreements are the key legal documentation in the RBC debt restructuring, providing for a transparent mechanism of discharging existing RBC debt obligations via the issue of new instruments and cash consideration in accordance with the debt restructuring terms agreed by ONEXIM Group and RBC management with the creditors in September 2009 (the “Restructuring”). These new instruments will include loan participation notes (the “LPNs”), ruble-denominated bonds with parameters identical to LPNs (for those creditors holding RBC debt in the amount of less than USD 200,000, or creditors facing regulatory restrictions in terms of investments in foreign securities), as well as cash settled options in respect of RBC shares (the “Warrants”), thereby allowing the creditors to participate in any future equity upside of the RBC Group (the “New Instruments”).
The execution of the Agreements became possible after the Initiative Group and Baker & McKenzie, an international legal firm, representing the interests of RBC creditors, approved the set of documentation related to the New Instruments.
RBC Group expects to complete the Restructuring within the next two months with the completion of the following events:
Execution of the Agreements with the remaining RBC creditors;
Issuance of the New Instruments for the purposes of settlement with the creditors. CJSC “RBC-TV Moscow”, the new holding company of the Group (the “New HoldCo”) will be the borrower under the new loan agreement entered into with EMIS Finance B.V., which will become the issuer of the LPNs and the Warrants;
Consolidation of RBC Group’s assets under New HoldCo;
Acquisition of a 51% stake in the New HoldCo for USD 80,000,000 by ONEXIM Group;
Settlement with creditors via the delivery of cash and New Instruments.
As a next step, RBC’s creditors and shareholders will be provided with information and cooperation, including the materials required to participate in the Restructuring and detailed step-by-step instructions for the creditors, including retail creditors.
As of today, an information web site "http://restruct.rbc.ru/" is operating, containing the full array of the Restructuring-related documentation.
The effect of the Restructuring terms and conditions is that 50% of RBC’s existing debt obligations (including accrued coupon and default interest) shall be exchanged into 5-year LPNs with a 7% coupon rate. The remaining 50% of RBC’s debt shall be exchanged at each creditors’ discretion into any combination of the following two options: (1) 8-year LPNs with a 6% coupon rate which includes a conditional put option at 5 years, and (2) cash consideration in the amount of 57% or 40% of face value (subject to the overall combination of options (1) and (2) selected by each creditor). In addition, the creditors shall receive cash consideration in the amount of 10% of 8-year LPNs to be received, as well as cash settled options in respect of 200 or 442 New HoldCo shares (subject to the overall combination of options (1) and (2) selected by each creditor) per each USD 1,000 of debt principal amount exchanged into LPNs.
Upon completion of the settlement with all creditors (tentatively, by the end of May 2010), the Company shareholders will be proposed to swap their shareholdings in OJSC “RBC – Information Systems” for shares in New HoldCo (subject to completion of all legal procedures to transform CJSC “RBC – TV Moscow” into an open joint-stock company). As a result of this share swap, the current Company shareholders will hold 49% of the shares in the New HoldCo which will by that time have the fully restructured financial debt in place. New HoldCo will be listed on MICEX and RTS.
German Kaplun, RBC CEO, has stated that the execution of the agreements with the Initiative Group signals that ONEXIM and key RBC creditors are committed in their efforts to complete the Restructuring, which should provide the necessary comfort to all other creditors to participate in the Restructuring process; provided that the Restructuring is completed in the near future in accordance with the agreed terms and conditions, the RBC Group expects to regain its strong financial standing and secure sustainable future growth.
According to Vladimir Pakhomov, an Investment Director at ONEXIM Group, finalizing negotiations on the Restructuring documentation and the commencement of the execution of the Agreements represent a key milestone on the way to resolving the Company’s debt issues; this will allow RBC to source necessary investments in the near future, to complete the Restructuring and focus on operating activities. ONEXIM Group sees significant opportunities for an accelerated RBC growth and expects considerable business scaling and value gains as it becomes an RBC shareholder.
The independent non-executive directors of RBC, Michael Hammond and Neil Osborn, are confident that the debt restructuring process is near final completion; this combined with the equity capital injection from ONEXIM Group will provide the Group with strong financial and shareholder foundations for growth in the future.
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