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. Last Updated: 07/27/2016

Uneximbank Merger Dodges Debts




Creditors of banking shell Uneximbank are inches away from signing off on a $2.2 billion restructuring agreement with a date tentatively set for examination of the plan in just under two weeks, bank advisers said Tuesday.


"Uneximbank and its creditor committees continue to work intensely to complete the extensive legal documentation required to effect a successful restructuring of the bank's obligations," said Todd Schafer, partner at international law firm Hogan & Hartson, which is acting as legal counsel to the bank.


"To this end, Unexim and the creditor committees are tentatively scheduled to meet in London on Jan. 31," he said.


Uneximbank is pushing to have the agreement approved and signed before the Moscow arbitration court restarts bankruptcy hearings Feb. 17.


The court ruled earlier in November that it could not decide if the bank should be liquidated before Uneximbank had made more progress on restructuring. That ruling came just one day after the Central Bank restored Uneximbank's license and after 99 percent of its creditors voted to approve the bank's debt-restructuring proposal.


Signing the debt agreement is the final legal hurdle before Uneximbank can begin restructuring debts of around $800 million owed to foreign creditors, $400 million to domestic lenders, as well as $600 million on forward contracts.


A key component of the debt-restructuring scheme is Uneximbank's merger with its sister structure, bridge bank Rosbank. Bank officials have said the deadline for the merger has been set for July 1.


The debt-swap plan also foresees a cash downpayment to creditors of 10 cents on every dollar invested and an issue of a new package of Eurobonds worth $130 million.


A subsidiary of Rosbank will issue the bonds before the merger with Uneximbank, Schafer said. Rosbank will guarantee the bonds, he said.


Rosbank is now the 12th-largest Russian bank by assets after it obtained 90 percent of Uneximbank's infrastructure and clients following the August 1998 financial crisis, Troika Dialog said in a research note Tuesday.


That scheme to swap Uneximbank's business to Rosbank has been widely criticized by analysts as a way of stripping assets away from Uneximbank to leave it a debt-ridden shell.


But bank officials have said the switch to Rosbank was the key to ensuring business was not lost and have said its eventual merger with Uneximbank means the move was justified.


But analysts in Moscow said the Rosbank merger scheme was dubious at best.


"The merger and implementation of the restructuring scheme will mean that Unexim will have successfully avoided paying back its creditors in full. The only good thing to come out of it is the fact that Unexim did not flatly refuse to pay anything," said Kim Iskyan, banking analyst at investment bank Renaissance Capital.