News (#4 April 2020)

Cases

Court ordered PrivatBank to pay out USD 200 million

The Pechersky District Court in Kyiv has confirmed the obligation of state-owned PrivatBank to fulfill the terms and conditions of deposit agreements concluded with offshore companies owned by the Surkis brothers without waiting for the essential court decision or the appeal in this case.

The issue is more than USD 200 million deposited by a number of offshore companies on the accounts of the Cyprus branch of PrivatBank in 2012-2014, as well as the interest that had accrued by 17 February 2020.

At the same time, the court noted that the banks lawyers did not provide sufficient evidence that a concurrent trial was taking place in Cyprus.

State Grain Corporation paid USD 4 million to Chinese company following court order

The largest state grain trader, the State Food and Grain Corporation, lost a lawsuit to the Chinese company CCEC worth USD 4 million in the international arbitration court under GAFTA (Grain and Feed Trade Association).

Acting Chairman of the Board, Simon Chernyavsky, informed that the specified amount had already been paid to the Chinese company. He explained that in 2015, SFGCU and CCEC concluded Annex No. 3 to a credit agreement worth USD 1.5 billion, which had been signed with Eximbank of China in 2012.

The Chinese party believes that under Annex No. 3, for every ton of grain SFGCU exported not only to China, but also to any other country, the corporation is obliged to pay Chinese CCEC fees in the amount of USD 5. And this is in addition to the payment of interests on loan and fees for its maintenance.

The Chinese party believed that the SFGCU did not comply with this provision and turned to GAFTA.

High Court of England confirmed limited nature of payments on PrivatBank Eurobonds

The High Court of England and Wales confirmed the payment mechanism for arbitral decisions adopted by the London Court of International Arbitration.

This court decision means that if arbitral decisions come into force, PrivatBank will be obliged to pay only to a limited class of holders of Eurobonds issued in 2010 and 2013.

Even if PrivatBank is obliged to make any payments, these will be significantly less than the total sum of claims filed by the trustee in arbitration proceedings. In the event that the defense strategy of PrivatBank on recognition of the bail-in procedure is successful, the bank will not be obliged to make any payments whatsoever.

Within the framework of PrivatBanks nationalization, its obligations to a specially created British company (SPV) a Eurobonds issuer were subject to a bail-in procedure and were exchanged for an additional issue of shares in the bank.

At stake here are three issues of Eurobonds: one worth USD 175 million at a rate of 10.875% maturing on 28 February 2018, another worth USD 200 million at a rate of 10.25% maturing on 23 January 2018, of which USD 40 million was repaid in August 2016 and one more worth USD 220 million at a rate of 11% (bonds of subordinated debt) maturing in 2021.

The issuer of Eurobonds maturing in January and February 2018 was UK SPV Credit Finance plc., a Special Purpose Vehicle registered in the UK.

The Eurobonds maturing in 2021 were issued through ICBC Standard Bank Plc. (UK), but during their restructuring this debt was reassigned to UK SPV Credit Finance plc.

Following PrivatBanks nationalization, the securities issuing company remained in the banks ownership.

In early October 2017, PrivatBank changed the trustee for Eurobonds worth USD 175 million maturing on 28 February 2018 and those worth USD 200 million maturing on 23 January 2018.

From 3 October 2017, the new trustee is Madison Pacific Trust Limited instead of Deutsche Trustee Company Limited (UK).

In its turn, on 27 October 2017, the National Bank gave approval for a change in the structure of the PrivatBank banking group.

SIA PrivatLizings (Latvia), Privatofis LLC (Dnipro), UK SPV Credit Finance PLC and Ukraine Mortgage Loan Finance NO.1 PLC (UK) were excluded from the group.

On 2 November 2017, Madison Pacific Trust Limited notified the bank of the acceleration of debts on Eurobonds.

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