Company name BKM Finance DAC
Headline Mandatory Measure Notice

RNS Number : 8947U
BKM Finance DAC
27 October 2017

Company name             BKM Finance D.A.C.

Headline                       Mandatory Measure Notice




  27 October 2017

BKM Finance D.A.C.


For immediate release

U.S.$200,000,000 9.15 per cent. Loan Participation Notes due 2023 (the "Notes") (ISIN: XS0944741833) issued by, but with limited recourse to, BKM Finance D.A.C. (the "Issuer") for the sole purpose of financing a subordinated loan to Public-Joint Stock Company "Bank Otkritie Financial Corporation" (formerly Public Joint-Stock Company "Khanty-Mansiysk Bank Otkritie") (the "Borrower").

The Issuer refers to the announcement dated 10 October 2017 relating to the Write Down Event Notice received from the Borrower.

Pursuant to a notice dated 24 October 2017 received from the Borrower the Issuer has received a Mandatory Measure Notice (the "Notice") for the purposes of the Subordinated Loan Agreement dated 14 June 2013 and as amended and restated with the Amended and Restated Subordinated Loan Agreement dated 27 August 2015 and as further amended by the Deed of Amendment to the Amended and Restated Subordinated Loan Agreement dated 28 January 2016 between the Issuer and the Borrower (the "Subordinated Loan Agreement").


1.         In the Notice, the Borrower notified the Issuer that:

a)         On 08 November, 2017 being the Mandatory Measures Effective Date, the Borrower's obligations to repay the principal amount of the Loan and to pay penalties for non-performance of obligations thereunder shall be terminated in full (such measure in respect of the principal amount of the Loan being a "Principal Write Down Measure", and in respect of the penalties being a "Penalties Cancellation Measure"), and any unpaid interest under the Loan shall not be paid and shall not accumulate as a result of the full termination of the Borrower's obligations to pay the amount of accrued interest under the Loan (such measure being an "Interest Cancellation Measure");

b)         The Borrower will not opt to effect the Exchange.

c)         The Borrower shall on the Mandatory Measures Effective Date:

(i)         firstly, terminate the obligations to pay the Penalties Cancellation Amount for the purposes of the Penalties Cancellation Measure;

(ii)        secondly, terminate the obligations to pay the Interest Cancellation Amount for the purposes of the Interest Cancellation Measure; and

(iii)       thirdly, terminate the obligations to repay the principal amount and write down the Principal Write Down Amount for the purposes of the Principal Write Down Measure.

(iv)       We confirm that undistributed profit, reserve fund and other sources of the Borrower's Common Equity Tier 1 Capital have been exhausted in full to absorb losses of the Borrower.

2.         The Borrower has determined the Penalties Cancellation Amount, the Interest Cancellation Amount and the Principal Write Down Amount and its determination is as follows:

a)         Penalties Cancellation Amount is zero;

b)         Interest Cancellation Amount is the amount of interest for the period beginning on (and including) 17 June 2017 and ending on (but excluding) 14 September 2017 and shall be USD 4,777,777.78 on the Mandatory Measures Effective Date;

b)         Principal Write Down Amount:

USD 200,000,000.00 (Two hundred million US dollars).

3.         In accordance with part 4 of the article 25.1 of the Federal Law dd 09.12.1990 No.395-1 "On Banks and Banking Activities" ("Banking Law") in the event of a reduction in the capital adequacy ratio of the credit institution below the level determined in the Bank of Russia's regulation for the termination (exchange, conversion) of the subordinated loan (deposit, credit, bond), as well as a participation plan of the Bank of Russia for the implementation of bankruptcy preventive measures is approved by the Board of Directors of the Bank of Russia, and taking into consideration the provisions of the sub-clause 2 of the item 12, of the article 189.49 of the Federal Law "On Insolvency (Bankruptcy)", the obligations of the credit organization to repay the principal amount of a loan under a subordinated loan agreement (deposit, loan) and any amounts of penalties are terminated in the amount necessary to restore the own funds (capital) adequacy ratio of the specified level or the levels of own funds (capital) adequacy ratios established by the Bank of Russia in accordance with the Federal law "On the Central Bank of the Russian Federation (the Bank of Russia)", accordingly the unpaid interest on such loans (deposits, credits, bonds) shall not be repaid and does not accumulate.

On 15 September 2017 the Board of Directors of the Bank of Russia approved a plan of its participation in the implantation of measures to prevent the Borrower's bankruptcy in accordance with the press-release published on the official website of the Bank of Russia.  As of 15 September 2017 the accrual of any interest was terminated.

4.         Other Parity Subordinated Instruments of the Borrower are subject to write down in full as well.

5.         Any penalties or accrued interest that has been cancelled in accordance with Clause 8 of the Subordinated Loan Agreement, shall not accumulate or be payable at any time thereafter, including where the relevant Write Down (Exchange) Event is no longer continuing. No penalties or interest shall be due or accrue from the Write Down (Exchange) Event Date and as long as a Write Down (Exchange) Event is continuing.

6.         Notwithstanding any other provision of the Subordinated Loan Agreement, any Write Down Measure(s) under Clause 8 of the Subordinated Loan Agreement shall not constitute an Acceleration Event (or a Potential Acceleration Event) or a default by the Borrower under this Agreement and shall not oblige the Borrower to indemnify the Lender in accordance with Clause 13 of the Subordinated Loan Agreement.

7.         From the Write Down (Exchange) Event Date and until the Write Down (Exchange) Event ceases to continue, the Borrower shall not make any payments in respect of penalties or interest on the Loan or repay the Outstanding Principal Amount under the Loan, and no penalties or interest shall accrue on such unpaid amounts.

Since the principal amount of the Subordinated Loan is written down to zero, the Subordinated Loan Agreement shall cease to have effect.

This announcement is released by the Issuer and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the Notes described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by the Directors of BKM Finance D.A.C.


Given by the Issuer.




The Directors

BKM Finance D.A.C.

Pinnacle 2
Eastpoint Business Park
Dublin 3








This announcement has been issued through the Companies Announcement Service of

The Irish Stock Exchange



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