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PrivatBank could finally make a breakthrough with its creditors after a minority holdout group of investors that has previously blocked the Ukrainian lender's attempts to restructure its debts said it will agree to the latest set of proposals, according to Reuters.
"We will now support this latest consent solicitation," said Daniel Freifeld, founder of Washington-based Callaway Capital Management, an asset manager that heads the creditor committee, Reuters reports.
The struggles to get the restructuring over the line at the systemically important bank are a microcosm of the challenges facing Ukraine. The state is also going through a protracted debt restructuring process that has only just started to see real progress after months of negotiations.
Like the sovereign, PrivatBank has had to soften its restructuring terms to get bondholders to agree to a deal.
Callaway Capital heads a creditor committee that holds around 25% of PrivatBank's outstanding $200million September 2015s - the debt being restructured - but still managed to slam the brakes on two attempts to extend the debt's maturity to January 2018.
For its restructuring, Privat proposed a new amortising bond but in the first two offers, investors were unhappy with the repayment schedule, which was back-loaded.
With its third offer, Privat is proposing a more regular repayment timetable with 20% of the debt due in August 2016, another 20% in February 2017 and 15% each in May, August, and November of 2017.
PrivatBank will repay the remaining 15% in January 2018. A loan linked to the bonds will also be repaid with the same schedule.
This is some improvement for investors, who had already rejected PrivatBank's previous offer to begin repaying the debt in October 2017.
"Most of the other creditors voted erroneously for the first offering," said Freifeld, "which created a liquidity crunch because the entire debt was due from late 2017, along with the old 2018 issuance [a separate US$175m 10.875% February 2018 bond]. The new consent solicitation gets rid of that concern by spacing out the amortization starting in 2016."
PrivatBank is prioritising meeting retail deposit demands over debt obligations, and the National Bank of Ukraine has said that if it lends money to the cash-strapped lender, that money must be used to service deposits.
However, investors remain confident that PrivatBank will be able to find the money to begin repaying the newly-restructured $200 million bond on time, as according to the new schedule.
One term that remains consistent across all PrivatBank's consent offers is to increase the coupon on the notes from 9.375% to 10.25%.
This new set of terms is contingent on a restructuring being agreed on the issuer's outstanding $150million 5.799% February 2016 bonds. PrivatBank said in July that it wanted to increase the maturity on these notes by five years and investors have already agreed in principle to the restructuring.
However, a maturity extension is not essential for PrivatBank to consider the notes restructured - and therefore allow the 2015s to be extended.
PrivatBank said in an message to investors: "For the avoidance of doubt, the 2016 notes restructuring may include any other amendments to the 2016 notes in addition to extension of maturity of the 2016 notes."
The September 2015 bonds were trading at a cash price of 65 on Wednesday, unchanged since August 11, according to Thomson Reuters Eikon prices. Meanwhile, the 2016 bonds were trading at a cash price of 59.52, flat to where they have been trading throughout August.
The consent solicitation deadline is September 2. A bondholder meeting is scheduled for September 7.