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01.09.2017

INTERNATIONAL BANK OF AZERBAIJAN COMPLETES ITS RESTRUCTURING PROCESS

 

Baku, 1 September 2017 – OJSC International Bank of Azerbaijan (the “Bank” or “IBA”) is pleased to announce that the initial distribution of Entitlements under its Restructuring Plan occurred earlier today. Accordingly, 1 September 2017 constitutes the Restructuring Date under the terms of the Restructuring Plan.

 

The Restructuring Plan was previously approved by an affirmative vote of holders of 93.9% of affected claims at the Claimant’s Meeting held on 18 July 2017, by the Financial Market Supervisory Authority of Azerbaijan on 25 July 2017 and by the Nasimi District Court in Baku at the hearing of the Bank’s application that took place on 17 August 2017.

 

The occurrence of the Restructuring Date constitutes successful conclusion of the Restructuring, subject only to termination of the proceedings in the Nasimi District Court that will take place in due course. Entitlements that were not distributed on the Restructuring Date were deposited into an account with the Distribution Agent pending satisfaction by the relevant Claimants of conditions for distribution of their Entitlements in accordance with the terms of the Restructuring Plan.

 

Khalid Ahadov, Chairman of IBA, commented: “The successful closing of the restructuring process earlier today is a key step in the Bank’s plan to ensure its long-term viability. The Bank is now in a position to work with the Ministry of Finance on completion of the remaining part of the transfer of certain impaired assets to Aqrarkredit. The combination of these two transactions will restore the Bank’s capital position, provide the Bank with the necessary financial strength to implement its business plan aimed at restoration of long-term profitability and also facilitate the Government of Azerbaijan’s objective of privatising the Bank by the end of 2018.”

 

Lazard acted as financial adviser to the Bank and White & Case LLP acted as its legal adviser in connection with the Restructuring. D.F. King acted as information and tabulation agent in connection with the Restructuring.

17.08.2017

            NASIMI DISTRICT COURT APPROVEs THE BANK’S RESTRUCTURING PLAN

 

Baku, 17 August 2017 – OJSC International Bank of Azerbaijan (the “Bank” or “IBA”) is pleased to announce that its Restructuring Plan, which was previously approved by affirmative vote of holders of 93.9% of affected claims at the Claimant’s Meeting held on 18 July 2017 and by the Financial Market Supervisory Authority of Azerbaijan on 25 July 2017, has been approved by the Nasimi District Court in Baku at the hearing of the Bank’s application that took place earlier today at 3:30 p.m. (Baku time).

 

In accordance with the applicable provisions of the Law on Banks, the Bank will proceed with implementation of its Restructuring Plan. As announced previously, the initial distribution of entitlements is expected to take place on or about 1 September 2017.

 

As a reminder, all Claimants (other than Noteholders) wishing to receive their entitlements on the initial distribution date are required to deliver to the Information and Tabulation Agent their duly executed Deed of Release and Cash Account Details Form (if applicable) by no later than 4:00 p.m. (London time) on 22 August 2017.

 

Terms used in this press release and defined in the Information Memorandum of the Bank dated 19 June 2017, as amended and/or supplemented from time to time, are used in this press release as so defined.

 

Further Information

For further information with respect to the process for distribution of Entitlements or the Restructuring generally please contact the Information and Tabulation Agent using the details set out below:

 

E-mail: IBA@dfkingltd.com

Website: https://sites.dfkingltd.com/iba

 

In London:

6th Floor

125 Wood Street

London EC2V 7AN

United Kingdom 

Telephone: +44 20 7920 9700

 

In Hong Kong:

Suite 1601, 16/F, Central Tower 28

Queen’s Road Central

Hong Kong 

Telephone: +852 3953 7230

 

THIS PRESS RELEASE OR ANY INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES NOR MAY THE SECURITIES TO BE ISSUED IN THE RESTRUCTURING BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION AS PROVIDED IN THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER. THERE IS NO INTENTION TO REGISTER ANY PORTION OF ANY SUCH SECURITIES IN THE UNITED STATES OF AMERICA OR TO CONDUCT A PUBLIC OFFERING OF SECURITIES IN THE UNITED STATES OF AMERICA.

THIS PRESS RELEASE OR ANY INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF ANY SECURITIES REFERRED TO HEREIN IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION, EXEMPTION FROM REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

26.07.2017

Moody’s Azərbaycan Beynəlxalq Bankının reytinqlərini yüksəltməyə başladı

 

Azərbaycan Beynəlxalq Bankının öhdəliklərinin könüllü restrukturizasiyası planı xarici kreditorlar tərəfindən qəbul edildikdən sonra Moody’s beynəlxalq reytinq agentliyi bankın reytinqlərinə yenidən baxaraq bəzi reytinqləri yüksəldib. Belə ki, xarici və yerli valyutada uzunmüddətli depozit reytinqi Caa2-dən Caa1 səviyyəsinə artırılıb. Xarici valyutada qorunmayan borclar reytinqi Caa3 səviyyəsindən Caa2-ə qaldırılıb. Bankın kredit ödəmə qabiliyyətinin baza səviyyəsi (Baseline Credit Assessments - BCA) də “ca” pilləsindən “caa3” pilləsinə qədər yüksəlib. Eyni zamanda, qarşı tərəf kredit riski qiymətləndirməsi (CRA) Caa1 (cr) səviyyəsindən B3 səviyyəsinə yüksəlib. Bankın uzunmüddətli depozit reytinqinə pozitiv proqnoz verilib.

Agentliyin açıqlamasında bildirilib ki, yeni reytinqlər restrukturizasiya planı üzrə səsvermənin 18 iyulda elan olunmuş nəticələrinə əsaslanır. Reytinqlərdə baş verən müsbət dəyişikliklər restrukturizasiya prosesi başa çatandan sonra bankın maliyyə durumunun yaxşılaşacağı ilə bağlı Moody’s-in gözləntilərini əks etdirir. Agentliyin proqnozlarına görə, öhdəliklərin restrukturizasiyası planının bu şəkildə icrası bankın maliyyə dayanıqlığını, kapital mövqeyini gücləndirəcək və aktivlərinin keyfiyyətini yaxşılaşdıracaq. Öhdəliklərin könüllü restrukturizasiyası ilə yanaşı, problemli aktivlərin bankın balansından çıxarılması da aktivlərinin keyfiyyətinin yaxşılaşmasına kömək göstərəcək.

Moody’s ekspertlərinin rəyinə görə, problemli aktivlərin transferi bu ilin sonuna qədər başa çatacaq. Nəticədə, Bankın birinci dərəcəli kapitalının 13% ətrafında olması ehtimal edilir. Agentlik bankın 2018-ci ili mənfəətlə başa vuracağını gözləyir. Mənfəətlilik səviyyəsi, ölkənin makroiqtisadi durumundan da çox asılı olacaq.

Moody’s Azərbaycan hökumətinin böyük ehtimalla banka dəstəyi davam etdirəcəyini gözləyir. Bu gözlənti bankın səhmlərinin 95%-nin dövlətə məxsus olması, ABB-nin ölkənin ən böyük bankı olması və bank bazarındakı aktivlərin əhəmiyyətli hissəsini bölüşməsi kimi amillərlə əsaslandırılıb. Eyni zamanda, hökumətin bankda vəsait yerləşdirmiş əmanətçilərə və digər müştərilərə dəstək verdiyi xüsusi qeyd edilib. Belə ki, öhdəliklərin restrukturizasiyası prosesinin ABB-də depoziti olan müştərilərə heç bir təsiri olmayıb. 

Rəydə o da göstərilib ki, restrukturizasiya planı başa çatdıqdan sonra Moody’s reytinqlərə yenidən baxacaq və gələcək durumuna uyğun olaraq bankın reytinqlərini yüksəldəcək.

18.07.2017

NOT FOR GENERAL RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA

International Bank Of Azerbaijan Restructuring Plan Approved By Claimants

Baku, 18 July 2017 – OJSC International Bank of Azerbaijan (the “Bank” or “IBA”) is pleased to announce that its Restructuring Plan was today approved by its creditors at the Claimants’ Meeting.

The Restructuring Plan, which relates to approximately U.S.$3.34 billion in principal amount of the Bank’s Designated Financial Indebtedness, was approved at the Claimants’ Meeting in Baku by Claimants holding 93.9 per cent. of the aggregate principal amount of Claims subject to the Restructuring. Under the Azerbaijan Law on Banks, the plan needed to be approved by Claimants holding at least two-thirds by value of the Claims. Claimants holding 94.1 per cent. of the aggregate principal amount of Claims subject to the Restructuring cast their votes at the Claimant’s Meeting. The Restructuring Plan will take effect once it has received the approval of the Financial Market Supervision Authority and the Nasimi District Court of Baku.

As a result of the Restructuring, Designated Financial Indebtedness in the amount of approximately U.S.$3.34 billion will be cancelled, in return for which Claimants will receive a combination of::

  • cash representing accrued and unpaid interest that falls due in the period between 10 May 2017 and 1 September 2017 (in the case of eligible Claimants in respect of Senior Liabilities and Subordinated Liabilities);
  • newly issued bonds of the Bank; and/or
  • newly issued bonds of the Republic of Azerbaijan.

The Republic of Azerbaijan is supporting the transaction through the exchange of certain of the Bank’s Designated Financial Indebtedness for direct sovereign obligations of the Republic, thereby providing credit enhancement to the Claimants receiving such sovereign obligations given the country’s higher credit rating.

 

As a consequence of the elections made in the course of the voting process by the holders of Senior Liabilities (1.7% for option 1, 50.2% for option 2 and 48.1% for option 3), Claims of certain holders of Senior Liabilities voted after July 4 (including part of the Claim of SOFAZ), together with the claims of holders of Senior Liabilities who did not vote or who voted against the Restructuring Plan, will be subject to the reallocation mechanism described in the Information Memorandum. 

 

Samir Sharifov, Minister of Finance of Azerbaijan, said: “The satisfactory outcome of IBA’s restructuring demonstrates that the plan supported by the Ministry of Finance serves the long-term interests of the Bank and of its creditors, who overwhelmingly approved it. The success of the operation will also facilitate the Government of Azerbaijan’s objective of privatising IBA by the end of 2018.”

Rufat Aslanly, Chairman of the Board of Directors of the Financial Market Supervisory Authority of Azerbaijan (FIMSA), added: “The restructuring plan for IBA – as proposed by the Bank and voted for by its creditors – is a positive development for Azerbaijan’s banking sector. The plan meets all regulatory requirements, domestic and international, and commands our full support.”

Khalid Ahadov, Chairman of IBA, noted: “Today’s results mark an important day for the Bank and our efforts to ensure its long-term viability. The restructuring was a lynchpin in this process and we are now in a much better position to return to financial health. The high approval rate indicates that our creditors overwhelmingly agreed with the Bank’s view – shared by our principal shareholder and our financial regulator - that the restructuring of the Bank’s financial indebtedness was the best way forward during this challenging time. Upon completion of the restructuring, the Bank will be in a position to work with the Ministry of Finance to continue strengthening the balance sheet of the Bank by completing the transfer of certain impaired assets to Aqrarkredit for a total value of AZN 4.9 billion.”

Once the Restructuring Plan becomes effective, each Claimant will be allocated a package of Entitlements consisting of cash and/or New Notes (or in certain circumstances the cash proceeds from the sale of New Notes), all as described in the Information Memorandum.

As a reminder, Claimants (other than Noteholders) have until 4.00 p.m. (London time) on 22 August 2017 (the “Deed of Release Delivery Deadline”) to submit a duly executed Deed of Release in respect of their Claims that are subject to the Restructuring. If a duly executed Deed of Release is not received by the Deed of Release Delivery Deadline, the distribution of Entitlements to the relevant Claimant will not be made on the initial distribution date, which is currently expected to be 1 September 2017, but at such later date after the delivery of a duly executed Deed of Release as IBA may determine in its sole discretion.

The Bank’s financial adviser for the Restructuring is Lazard and its legal adviser is White & Case LLP.


Terms used in this press release and defined in the Information Memorandum of the Bank dated 19 June 2017, as amended and/or supplemented from time to time, are used in this press release as so defined.

 

International media contact:

Graham Ackerman, APCO Worldwide for IBA

gackerman@apcoworldwide.com

+44 (0) 7818 542 377

 

THIS PRESS RELEASE OR ANY INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES NOR MAY THE SECURITIES TO BE ISSUED IN THE RESTRUCTURING BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION AS PROVIDED IN THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER. THERE IS NO INTENTION TO REGISTER ANY PORTION OF ANY SUCH SECURITIES IN THE UNITED STATES OF AMERICA OR TO CONDUCT A PUBLIC OFFERING OF SECURITIES IN THE UNITED STATES OF AMERICA.

THIS PRESS RELEASE OR ANY INFORMATION CONTAINED HEREIN DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF ANY SECURITIES REFERRED TO HEREIN IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION, EXEMPTION FROM REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

19.06.2017

NOT FOR GENERAL RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES

19 June 2017

International Bank of Azerbaijan Convenes the Claimants’ Meeting and Commences the Voting Process for its Debt Restructuring

OJSC International Bank of Azerbaijan (“IBA”) announced today that the claimants’ meeting in relation to its ongoing restructuring will be held on 18 July2017.

IBA is also pleased to confirm that, having taken into account feedback received from certain creditors and with the concurrence of the Ministry of Finance of Azerbaijan, modifications to particular aspects of the restructuring plan have been made, including the following:

  • The new 2032 notes to be issued by the Republic of Azerbaijan will benefit from an additional amortisation payment and thus will be redeemed in three equal annual installments (rather than two equal annual installments as previously contemplated).
  • Claimants will not be limited to select only one allocation option but will be able to request several different allocation options by submitting a separate form of proxy or voting instruction in respect of each amount in respect of which such claimant wishes to make a separate election.
  • The “first come, first served” allocation mechanism has been changed to an 11 business day early bird period. Claimants who submit their votes within this period and indicate that they wish to vote in favour of the proposed restructuring plan will receive their preferred allocation irrespective of any limits on the minimum aggregate size of the new 2029 notes or the new 2032 notes (although the maximum aggregate principal amount of the new IBA notes will continue to be $1 billion).
  • The treatment of interest for senior and subordinated liabilities will be modified as follows:
    • Only claimants who cast their votes in favour of the restructuring plan will receive any entitlements in respect of accrued interest;
    • Accrued interest will be calculated up to 1 September 2017 (as opposed to 13 July 2017 as previously contemplated) and interest on the new notes to be issued as part of the restructuring will correspondingly accrue from 1 September 2017; and
    • As a result of the above change, all interest on senior and subordinated liabilities that falls due before 1 September 2017 will be paid to claimants in cash on the relevant distribution date and all other interest that accrues but does not fall due before 1 September 2017 will be capitalised and form part of the principal of the relevant claims for the purposes of calculating the amount of new notes to which the relevant claimant will be entitled.

The information memorandum, which has been published by IBA today and is available for download (subject to certain restrictions and certifications) at https://sites.dfkingltd.com/iba, contains detailed information about the proposed restructuring, including the detailed terms of the restructuring plan and details of the voting procedure.

Important Notice

This announcement does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any jurisdiction.

This announcement does not constitute an offer to sell or a solicitation of an offer to buy any securities to any person in the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada or Japan or in any jurisdiction to whom or in which such offer or solicitation is unlawful. Neither IBA nor the Republic of Azerbaijan has registered or intends to register any of their securities under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or under the applicable securities laws of Australia, Canada or Japan and no such securities may be offered or sold in the United States, Australia, Canada or Japan absent registration or an exemption from registration requirements under the Securities Act or under the applicable securities laws of Australia, Canada or Japan. Neither IBA nor the Republic of Azerbaijan intends to conduct a public offering of any securities in the United States, Australia, Canada or Japan.

This announcement is only addressed to and directed at persons in member states of the European Economic Area (“EEA”) who are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC as amended, including by Directive 2010/73/EC) (“Qualified Investors”).  In addition, in the United Kingdom, this announcement is addressed to and directed only at, Qualified Investors who (i) are persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (ii) are persons who are high net worth entities falling within Article 49(2)(a) to (d) of the Order, or (iii) are other persons to whom this announcement may otherwise lawfully be communicated (all such persons together being referred to as "relevant persons").

This announcement must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the EEA other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this announcement relates is available only to relevant persons in the United Kingdom and Qualified Investors in any member state of the EEA other than the United Kingdom, and will be engaged in only with such persons.

 

23.05.2017

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS PRESS RELEASE

International Bank of Azerbaijan launches debt restructuring offer to its creditors

IBA and Ministry of Finance of Azerbaijan start debt operation at Azerbaijan’s largest bank with investor presentation in London.

LONDON - Today, the International Bank of Azerbaijan (IBA) launched its offer to creditors regarding the restructuring of its debt. In an investor presentation in London, IBA provided details of its proposal to ensure the financial viability of the Bank. IBA is a majority state-owned commercial bank.

The proposed restructuring will affect three types of IBA’s indebtedness (trade-finance related instruments, senior instruments and subordinated debt) with an aggregate principal amount of approximately USD 3.3 billion. The proposed debt restructuring contemplates exchange of IBA’s indebtedness, none of which benefits from sovereign guarantee, for direct sovereign obligations of the Republic of Azerbaijan, thereby offering credit enhancement to IBA’s creditors given the country’s higher credit rating.

The full details of the proposed terms can be found in the investor presentation that is available at: https://www.ibar.az/en/investors/investor-presentation/

 The largest bank in Azerbaijan and a systemically important institution for the country’s financial system, IBA has been financially supported by the Government of Azerbaijan through combined capital injections and the transfer of bad assets over the past decade. Serious criminal misconduct of certain members of IBA’s previous management and two deep currency devaluations significantly weakened the Bank’s financial position and have necessitated the further measures announced today.  As previously stated, the Bank has suspended payments of principal and interest on all obligations included in the restructuring (other than interest on trade finance obligations, which will continue to be paid).

Khalid Ahadov, Chairman of the Board of IBA, said: “Since I was appointed to serve as Chairman of the International Bank of Azerbaijan, the Bank has sought to determine the measures required to ensure its long-term viability and prepare its future privatisation. A systematic assessment of the Bank’s balance sheet has led us to the conclusion that the only way forward is to restructure not only the Bank’s assets but also its liabilities. We are confident that our sound and fair proposal will be agreeable to all creditors affected by the restructuring plan and are committed to finding a long-term solution during this challenging time for the Bank.”

In order for IBA’s debt to be successfully restructured, two-thirds of the affected creditors by value must vote in favour of the proposed restructuring plan at the upcoming creditors’ meeting to be convened tentatively on 13 July 2017. IBA anticipates distributing the notice of the creditors’ meeting, together with an information memorandum describing the restructuring plan and creditor voting process, on 14 June.

Samir Sharifov, Minister of Finance of Azerbaijan, also commented: “IBA has been in serious financial distress since 2015 as a result of internal mismanagement and embezzlement by its former CEO coupled with two rounds of local currency devaluation. The Government of Azerbaijan has led the bail out of the Bank since 2015 shouldering a large financial burden and continues to do so with this restructuring plan. The Government’s continued support of the plan is illustrated by its willingness to assume $2.4 billion of IBA’s debt on top of its previous support and provide the resulting credit enhancement to participating creditors. We believe that this proposal fairly serves the interests of the Bank’s foreign creditors and ensures its long term viability.”

 Rufat Aslanli, Chairman of the Board of Directors of the Financial Market Supervision Authority, commented: “We have reviewed the International Bank of Azerbaijan’s restructuring plan and we are confident that the proposed measures will help strengthen the Bank’s financial position and liquidity. As the country’s largest and systemic bank, IBA plays a fundamental role in the banking system’s overall facilitation of payments and social contributions. We believe that the proposed restructuring plan offers better outcome for both creditors and IBA, compared to other possible alternatives.”

  # # #

International media contact:

Graham Ackerman, APCO Worldwide for IBA

gackerman@apcoworldwide.com

+44 (0)7818 542 377

   

This press release or any information contained herein does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of IBA or the Republic of Azerbaijan.

This press release does not constitute an offer of securities for sale in the United States nor may any securities be offered or sold in the United States absent registration or compliance with an exemption from registration as provided in the US Securities Act of 1933, as amended, and the rules and regulations thereunder. There is no intention to register any portion of any offering in the United States of America or to conduct a public offering of securities in the United States of America.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.

11.05.2017

International Bank of Azerbaijan announces measures to stabilize its financial position

The International Bank of Azerbaijan (“IBA”) has been working closely with the Ministry of Finance of Azerbaijan (the “Ministry of Finance”), the Financial Market Supervision Authority of Azerbaijan (“FIMSA”) and the Central Bank of the Republic of Azerbaijan to address issues relating to IBA’s financial position and the sufficiency of its regulatory capital in accordance with the objectives of the Presidential Decree dated 15 July 2015.

IBA is currently finalising the preparation of its consolidated financial statements for 2016 and expects these to show a net loss of approximately AZN 1.9 billion, mainly as a result of a negative net interest margin, foreign exchange losses due to the continued devaluation of the Manat against major trading currencies, and increase in provisioning against both its retail and corporate loan portfolios. As a result, its tier 1 capital ratio as at 31 December 2016 is expected to be negative at approximately -4.70%.

In order to address the deteriorating financial position of IBA, the Supervisory Board of IBA has concluded, with the support of the Ministry of Finance and FIMSA, that further measures are urgently required in order to guarantee the long-term viability of IBA.

To this end, IBA has commenced a process of voluntary restructuring in accordance with the applicable provisions of the law of the Republic of Azerbaijan on banks. On 4 May 2017, the Nasimi District Court issued an order commencing a process of voluntary restructuring on the basis of an application of IBA and a proposed restructuring plan. The process will lead to a meeting of all creditors affected by the restructuring plan. If approved by two-thirds of the affected creditors by value the plan will be accepted and become binding on all of them.

The restructuring plan contemplates a restructuring process to be effected through an exchange of  IBA senior and junior foreign currency obligations for direct sovereign obligations of the Republic of Azerbaijan. 

Pending the implementation of the planned restructuring process, and to ensure equal treatment of all affected creditors, IBA has suspended payments of principal and interest with respect to all obligations to be included in the operation (other than interest under trade finance facilities). To this effect, on 10 May 2017, IBA did not make the scheduled payment of principal and interest under the U.S.$100 million subordinated loan owed to Rubrika Finance Company Limited.

Although the suspension of principal and interest payments is regrettable, IBA considers it a necessary step to ensure a successful outcome of the restructuring process which is in the best interests of all its stakeholders.

IBA will continue to conduct business with its clients in the ordinary course, including all transactions in relation to individual and corporate deposits. All other services and operations of IBA will continue as usual.

Mr Samir Sharifov, Minister of Finance of Azerbaijan, commented:

“The Ministry of Finance has noted with concern the deteriorating financial and capital position of International Bank of Azerbaijan.  Re-establishing the financial viability of IBA is critical so that the Bank can continue to provide important banking services to the Azerbaijan economy. The steps that are currently being taken by the Bank are essential for achieving financial stability, and are being undertaken with the full support of the Ministry of Finance.  The Ministry of Finance hopes and expects that holders of IBA’s foreign currency obligations will agree to support the proposed restructuring plan so as to facilitate the provision of additional support to IBA from the government.  In the meantime, the Ministry of Finance notes with approval that depositors in IBA will not be impacted by the proposed restructuring, and that the Bank’s normal services and operations will continue to be conducted. 

I look forward to participating in the important meeting with IBA’s investors in London on 23 May in support of the Bank’s restructuring plan.”

Mr Rufat Aslanli, the Chairman of the Board of Directors of FIMSA, commented:

“We have reviewed the International Bank of Azerbaijan’s restructuring plan and we are confident that the proposed measures will help strengthen the Bank’s financial position and liquidity. As the country’s largest and systemic bank, IBA plays a fundamental role in the banking system’s overall facilitation of payments and social contributions. We are concerned regarding the continuing decline in the financial and capital indicators of the Bank. We believe that implementation of IBA’s proposed restructuring plan, as a precursor to the provision of further support for IBA from the government, is an important step not only for the Bank, but for the entire banking sector of Azerbaijan. We note with approval that the restructuring plan will only affect IBA’s foreign currency obligations, and that depositors will be unaffected by the plan.”

Mr Khalid Ahadov, the Chairman of the Board of IBA, commented:

“IBA is in a difficult financial position, as our financial results for 2016 will show.  However, I am hopeful that with the support of holders of our foreign currency obligations for our restructuring plan, the future financial viability of the Bank can be assured. I am gratified for the continuing support of the Ministry of Finance and FIMSA in our current situation, and would ask our important financial partners for patience as we complete this necessary process.

I would like to assure individual and corporate depositors of IBA that they will not be affected by our current restructuring plan.  Furthermore, our normal services and operations are unaffected by this regrettable but necessary process.”

IBA has retained Lazard Frères, as financial advisers, and White & Case LLP, as legal advisers, in relation to the planned restructuring process. 

Investor Presentation

The proposed commercial terms of the restructuring process and the expected timetable for its implementation will be announced by IBA at an investor presentation that will take place at 11:30 a.m. (London time) on 23 May 2017 at the offices of White & Case LLP located at 5 Old Broad Street, London EC2N 1DW, United Kingdom.

Creditors of IBA who would like to attend the investor presentation in person should e-mail ibar.creditors@lazard.com to register. Investors who are unable to attend in person will be able to follow the presentation via a webcast and teleconference. Investors wishing to attend via webcast or teleconference should register at http://webcast.openbriefing.com/iba_23-05-2017/. The deadline for registration is 11:00 a.m. (London time) on 23 May 2017.

For further information please contact ibar.creditors@lazard.com copy Sabina Abassova, Head of DCM & Ratings at sabina.abassova@ibar.az.