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Investors mull collateral call on bond secured with Russian Standard Bank shares

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Investors mull collateral call on bond secured with Russian Standard Bank shares

Investors holding Russian Standard Ltd.'s defaulted eurobond, secured with a 49% stake in JSC Russian Standard Bank, threatened to initiate a collateral call if the company does not repay its liabilities in full, Reuters reported June 13.

A committee of investors owning more than 25% of the bond issued an acceleration notice demanding Russian Standard Ltd. to immediately repay the entire $544.8 million due on the bond, the newswire noted.

The group, which had previously rejected Russian Standard Ltd.'s restructuring proposal, wants the bank's shares used as collateral on the bond, Reuters reported.

Russian Standard Ltd.'s representative reportedly said in an email to Reuters that the company was aware of the creditors' step, and that it was involved in discussions with bondholders and could soon launch an official bondholder voting process. The company also noted that enforcement process on the shares could take some time as it would involve Russian court procedures and may require regulatory notices or approvals.

The bond in question was issued in 2015 as the result of the restructuring of two Russian Standard Bank bond issues amounting to $350 million and $200 million, respectively, with Russian Standard Ltd. being the issuer of new bonds under the restructuring deal. In October 2017, Russian Standard Ltd. missed a coupon payment on the restructured bond and the Russian National Settlement Depository announced the default of the bond in November that year.