Chadbourne represented 28 International lenders on financial restructuring of USD 400 million debt of Kreditprombank

Chadbourne & Parke LLP has acted for over two years on behalf of a group of 28 financial institutions from all over the world on restructuring the debt of PJSC Kreditprombank. The restructuring was substantially completed on 23 September with the conversion of over USD 100 million of the consolidated debt of Kreditprombank into ownership of 47.783% of Kreditprombank. Work continues on the post-completion implementation of the restructuring agreements.

Chadbourne fielded a multi-disciplinary team of lawyers from Kiev, Moscow and London offices to work on the deal. Ms. Handz and International partner Oleg Mazur led the negotiation of the relevant restructuring and finance documentation and partner Charez Golvala led the corporate work required to implement the debt to equity conversion.

During the restructuring process, Chadbourne advised on a wide range of subjects, including insolvency risks, financing matters, banking regulatory issues, Ukrainian antimonopoly and other consents, shareholders’ agreements and corporate governance, Ukrainian securities and corporate law, relationships with the National Bank of Ukraine, disputes among original shareholders and multi-jurisdictional completion arrangements.

The 28 creditors of Kreditprombank negotiated for several months before agreeing upon a framework for the restructuring of over USD 400 million of debt in early February 2010. The lenders’ debt was consolidated in September 2010 and 40% of that consolidated debt was to be converted into subordinated debt and equity in Kreditprombank by 31 March 2011. In the space of six weeks in November and December 2010, the restructuring process had to be amended substantially to convert all USD 140 million of senior debt into subordinated debt in order to inject additional Tier 2 regulatory capital into Kreditprombank before the end of the year and still be sure that the conversion into equity would take place by 31 March 2011. On 23 September the original restructuring plan, as envisaged in February 2010, was completed with the conversion of USD 100 million of subordinated debt into equity in Kreditprombank, through a Cypriot-based special purpose company.