The creditors of Alliance Bank, Kazakhstan's second-largest lender to default this year, voted to approve a plan to restructure KZT677 billion ($4.5 billion) of debt.
The restructuring, already approved by the bank's Eurobond holders on Friday, was backed by 95.1 percent Alliance's creditors. According to Kazakh law, a two-thirds majority is needed for approval.
The deal will help Alliance reduce its debt to about KZT150 billion ($1 billion). The restructuring plan included several options from immediate redemption at a deep discount to maturity extension to conversion to equity. Following the restructuring, Kazakhstan's state holding and investment company Samruk-Kazyna will end up with a 67-percent stake in the bank, while creditors will get 33 percent.
Samruk-Kazyna is reportedly already negotiating a possible sale of its stake. Last month it said an Arab private equity fund had expressed interest in buying the state's entire 67-percent stake.
Alliance is the first of four defaulted Kazakh lenders to reach a restructuring agreement with creditors.
"This vote was the final stage of negotiations," Alliance CEO Maksat Kabashev told reporters. "We expect to complete the whole restructuring process by March 1."
Alliance defaulted on its debt on April 13 after its auditors discovered $1.1 billion of liabilities that were not reflected on its balance sheet. Zhomart Yertayev, the former CEO of Alliance who headed the bank when the questionable transactions took place, and other former executives have either been arrested or put on the international wanted list in connection with their activities at Alliance.
At the same time, Alliance was one of Kazakhstan's most rapidly growing banks, aggressively pushing ahead its retail business, even as analysts voiced concerns over loan quality.
"It would be easier for creditors to deal with the problem of a $1.1. billion loss than with quality deterioration of Alliance's bank loan portfolio," Eric Lalo, a representative of investment bank Lazard Freres, which advised Alliance on its debt restructuring, told reporters on Tuesday.
SRI
