OREANDA-NEWS. November 23, 2010. Kazakhstan Kagazy plc has restructured its loan from Alliance Bank (USD 29.3million) and that Alliance Bank has refinanced the loan from Eurasian Bank (USD 5.5 million) which matured in August 2010. This is a significant step in the restructuring of the Group’s debt, Kazakhstan Kagazy said in a press release.

Following a long period of negotiations, the company has reached agreement with Alliance Bank to restructure its loan and to refinance the Group’s Eurasian Bank loan. Alliance Bank has agreed to reduce the interest rate, to suspend interest and principal for a period (subject to the agreement to refinance in 2011 half of the Eurasian Loan), to re-dominate the loan in KZT and to waive all fines and penalties.

The Group remains in constructive discussion with the Development Bank of Kazakhstan and the European Bank for Reconstruction and Development, its other bank lenders. The Group has agreed restructuring terms with bondholders representing 12% of its outstanding bonds, and remains in constructive discussion with the remainder. The Group looks forward to being able to make further announcements in this matter in due course.

The board of the company notes that if agreement is not reached with its other lenders and with its bond holders or if discussions with the Group's lenders do not result in a satisfactory outcome, the ongoing prospects of the Group will be uncertain.

David Facey, Partner, SP Angel Corporate Finance LLP, financial advisers to the Group commented: “This is a significant step forward for the Group. The terms of the new Alliance loan represent a significant improvement over the terms of the previous Alliance and Eurasian Loans and will act as a cornerstone upon which to create a solid financial base for the future of the Group. The Group continues to make solid improvement in its operating results as the economy improves and as the Group’s restructuring measures take effect. We appreciate the professional contribution of Alliance and Eurasian, as well as the ongoing efforts of all our lenders in assisting the Group’s return to a sound financial footing.”

Kazakhstan Kagazy is a major industrial group in Kazakhstan and runs Kagazy Recycling LLP, Central Asia’s largest producer of paper, corrugated board and packaging products, which was established in 2001.