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INTEGRITES Has Advised Minfin and Ukrgasbank on EUR 30 mln Convertible Loan from IFC

INTEGRTIES has advised the Ministry of Finance of Ukraine (Minfin) and JSB Ukrgasbank, a state-owned bank, in connection with EUR 30 mln loan agreement and implementation agreement with the International Finance Corporation (IFC). The five-year loan for Ukrgasbank comes with an option for IFC to convert the loan into the common shares. The deal is unique for the Ukrainian banking market and is an important step towards privatization of Ukrgasbank.

It is contemplated that the Government will sell the shares in Ukrgasbank to a private investor after IFC has exercised an option to convert and become a shareholder of Ukrgasbank. This deal is the first significant step made by the Government in attempting to launch a full-scale privatization of state banks which falls within the recently adopted strategy for privatization of state banks and appears to be a part of the Government’s commitments under the IMF Stand-By Arrangements.

Commenting on the deal, INTEGRITES partner Igor Krasovskiy said: “This breakthrough transaction is a strong signal to the financial markets of the Government’s commitment to decrease the state’s share in the banking sector. This is an excellent news for the market, and it’s a real pleasure to have helped Minfin and Ukrgasbank with this landmark deal.”

“We are happy to enter the new year with signing the deal between Minfin, Ukrgasbank and IFC which paves the way for future sale of the bank’s shares to a strategic private investor. This deal is a result of a 3-year transformation of the bank’s corporate governance policies and reducing involvement of the state into decision-making procedures. It is a perfect example to follow to other Ukrainian state banks” – added another partner Illya Tkachuk, who co-led the INTEGRITES team.

INTEGRITES team advised as Ukrainian law counsel on all aspects of the transaction, including loan agreement, implementation agreement, and other transaction documents underlying the conversion of loan into share capital. The scope of mission also included comprehensive advice on the share conversion mechanics, corporate governance, and state aid law. INTEGRITES team was also involved in interactions with the Antimonopoly Committee of Ukraine to ensure smooth implementation of the transaction.

The INTEGRITES team was led by Partner and Head of Banking and Finance Igor Krasovskiy and Partner and Head of Corporate and M&A Illya Tkachuk, with significant support from Senior Associates Olena Savchuk and Inna Kostrytska. Partner and Head of Antitrust and Competition Serhii Shershun and Associate Mykola Boichuk advised on state aid law.

White & Case team, led by Partner Christopher Czarnocki, advised Minfin and Ukrgasbank on English law aspects of the transaction.

IFC is a member of the World Bank Group and the largest global development institution focused on the private sector in emerging markets. Working in more than 100 countries, in fiscal year 2020, IFC invested USD 22 bln in private companies and financial institutions in developing countries.

JSB “Ukrgasbank” is a universal bank in Ukraine operating a country-wide network of nearly 270 branches with over 4 000 employees servicing more than 2.2 million individuals and over 75 000 corporate and SME customers. It is the fourth largest bank in Ukraine by assets with a 9% market share. The bank focuses on financing projects that contribute to the efficient use of resources, reduction of CO2 emissions and renewable energy development.

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