Important News for BTA (Bank TuranAlem) Bondholders from Kyrgyz Supreme Court

BISHKEK, Kyrgyzstan -

The Supreme Court of Kyrgyz Republic has held that it is the Kazakh bank and not “Turanalem Finance BV” (SPV) which shall pay the bondholders for the purchase of the now defaulting bonds of Kazakh BTA Bank.

Turanalem Finance BV (SPV) is the Dutch registered BTA Bank’s special purpose company.

The Kyrgyz Supreme Court held this verdict when ruling on a private claim by an aggrieved investor against Investment Company of Central Asia,LLC.

The Court ruled that the whole scheme of routing bond investments through a “hollow” special purpose entity was indeed a sham masking the economic transaction of lending money directly to the Kazakh BTA.

The Court has established that the SPV had no economically significant activity of its own and all business decisions of the SPV were in fact taken by BTA Bank, the size of the SPV’s capital was very small in comparison with the multi-billion volume of bond issues and the investors understood that the person responsible for the repayment of the funds is BTA Bank and not the SPV.

The Court held that the true economic purpose of creating the SPV and the offering documentation was to raise money from investors by BTA Bank and the true intention of the investors was to lend money to BTA, or to accept the BTA credit risk for certain return, in case of the secondary bond market.

The Court held that the creation of the SPV and of the offering documentation was a sham.

The Kyrgyz Supreme Court excluded the SPV (Turanalem Finance BV) from the list of defendants, held BTA bank directly liable to investors for the face value of the bonds and in return asked the claimant to hand over the bonds back to the bank, as these were held a legal nullity.

The Kyrgyz Supreme Court ruling may mark an interesting development in the restructuring process initiated by BTA, opening possibilities for direct recovery of funds for the BTA bondholders by pursuing the bank’s liquid assets held outside its home country.

For further information: Vugar Khalilov, CEO Flexi Communications 10th floor, Business Centre 32 Razzakov Street Bishkek, 720040 Kyrgyz Republic T +996-312-900-144 F +996-312-902-123 office@flexicommunications.com

Source: Flexi Communications

For further information: Vugar Khalilov, CEO, Flexi Communications, 10th floor, Business Centre, 32 Razzakov Street, Bishkek, 720040, Kyrgyz Republic, T +996-312-900-144, F +996-312-902-123, office at flexicommunications.com