[July 07, 2015]

JSC Astana Finance Completes $2 Billion Debt Restructuring

JSC Astana Finance (Astana Finance or the Company), the Kazakh financial services group, has completed its successful $2 billion debt restructuring. The Kazakh Specialised Inter-district Economic Court of Almaty (the Kazakh Court) issued its final approval marking the completion of the Company's restructuring on 2 June 2015 and the order of the Kazakh Court came into force on 23 June 2015.

Astana Finance, which is now effectively owned by its erstwhile international creditors, was the third Kazakh financial institution to default on its international bond obligations, in May 2009, following the global financial crisis.

A Restructuring Plan proposed by Astana Finance was originally approved by creditors holding more than the requisite two-thirds by value of the debt affected at a creditors' meeting in Almaty on 29 June 2012 and, then again, at a creditors' meeting on 27 March 2014. However, due to a number of local tax, legal and regulatory issues, it did not prove possible to complete the restructuring on either occasion.

By the beginning of March 2015, these various issues had been addressed by, respectively, the granting to Astana Finance of an ability to defer the corporate income tax liabilities arising from the restructuring, amendments to the Civil Procedure Code of Kazakhstan, and the issue of 700 million new common shares ear-marked for international creditors. Accordingly, on 6 March 2015, Astana Finance published a new Information Memorandum, including proposed amendments to the Restructuring Plan for approval by creditors. The amended Restructuring Plan was duly approved by holders of 69.98% by value of the debt affected at a further creditors' meeting on 21 April 2015 and then approved by the Kazakh Court on 27 April 2015. Distribution of the revised entitlements for creditors approved under the amended Restructuring Plan took place on 22 May 2015: in exchange for cancellation of their original claims, Astana Finance provided each international creditor with its pro rata share of an increased amount of $300 million in cash, dollar denominated recovery notes with an initial reference amount of $50 million nd, in the form of GDRs, at least 99% (increased from 60%) of the total enlarged common share capital of Astana Finance post-restructuring. Domestic creditors are receiving a pro rata share of a series of Kazakhstan Tenge denominated zero coupon notes with an aggregate principal amount at maturity in 2018 of the Tenge equivalent of approximately $107 million.

The result is that, overall, international creditors have received a return in cash of 22.2% (calculated using historic exchange rates) of the nominal amount of their restructured claims (including interest accrued up to 31 December 2010), together with an allocation of dollar recovery notes paying a return linked to the proceeds of the Company's future recoveries and disposals. The two principal categories of domestic creditors will, on redemption of the Tenge denominated notes in 2018, have received returns of 17% and 28% respectively.

Mr Marat Aitenov, Chairman of the Board of Directors of Astana Finance, said: "This restructuring has been a long and arduous process but, on behalf of Astana Finance, I would like to thank all our creditors for their great patience and forbearance throughout this difficult period for the Company, and especially our International Creditors' Committee coordinated by Franklin Templeton for their constructive support."

Mr William Ledward of Franklin Templeton Investment Management Limited, Co-ordinator of Astana Finance's International Creditors Committee, said: "We are very happy that the restructuring has now been completed after a number of previous attempts - we are grateful to the current management of Astana Finance who have worked hard, under difficult conditions, in order to maximise the possible recovery for international creditors and which was reflected in the high percentage of votes cast in favour of the terms offered under the plan. We recognise also that the restructuring could not have been completed without the support of the National Bank of Kazakhstan and other relevant authorities in Kazakhstan. We would also like to thank both Sidley Austin and Dechert for their continued efforts over the years. In particular, we would like to make a special reference to the late Peter Donnelly of Banco Finantia, one of the founding members of the Creditors' Committee, who devoted a great deal of time and effort into this process. Peter sadly died in 2014 before the successful completion of the restructuring."

Stephen Roith, a capital markets partner at Sidley Austin in London who advised Astana Finance throughout the process on the international legal aspects of the Restructuring, said: "This restructuring has proved to be a lengthy and complex process, negotiated with a range of different creditors within the context of difficult global market conditions and involving court proceedings in Kazakhstan under the country's special bank restructuring regime co-ordinated with successful recognition proceedings in the US and the UK. We are delighted to have been able to assist Astana Finance to develop a restructuring plan that has received creditor and court approval. International creditors, in their capacities as holders of 99% of Astana Finance's enlarged common share capital, have also given the Company their approval to put in place a new corporate governance code and a more meritocratic approach to remuneration through a western-style set of performance-related incentives for senior management. Taken together, we hope that all these measures will enable Astana Finance to continue its operations with a view to providing a meaningful return to creditors over a number of years."

Astana Finance's own Legal Department and GRATA Law Firm advised the Company on Kazakh law.

The International Creditors' Committee was advised by a team at the London office of Dechert led by Camille Abousleiman and Giles Belsey.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150707006259/en/

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