Kazakh Mortgage-Backed Securities 2007-I B.V. press release
Kazakh Mortgage-Backed Securities 2007-I B.V.
(a private limited liability incorporated in The Netherlands with limited liability under registered number 34.25.79.96)
and as issuer (the Issuer)
of
US$ 123,000,000 Class A Mortgage Backed Floating Rate Notes due 2029
US$ 11,300,000 Class B Mortgage Backed Floating Rate Notes due 2029
US$ 7,100,000 Mortgage Backed Floating Rate Notes due 2029
(together the Notes)
1. The date of this announcement is 23 March 2010.
2. We refer to the announcement dated 21 December 2009. We also refer to the notices of meeting dated 26 November 2009 (the Notice of Meeting) which convened a meeting of Class A Noteholders on 18 December 2009 in Amsterdam which was subsequently cancelled as notified by the Issuer in a notice published on 11 December 2009.
3. As stated in the notice dated 15 September 2009, JSC Hypothecary Organisation BTA IPOTEKA (BTAI) has breached certain provisions of the Transaction Documents which triggered a Servicer Termination Event. As a consequence BTAI was required to be replaced by a Back-up Servicer, JSC Halyk Bank (Halyk Bank), under the terms of the Back-up Servicing Agreement.
4. As disclosed in the Notice of Meeting, Halyk Bank stated that it was not in a position to take over the role of Servicer from BTAI at that time. Following ongoing discussions and correspondence, the Loan Notes Issuer, the Loan Notes Trustee, the Issuer and the Trustee sent a letter to Halyk Bank, BTAI and JSC “Bank TuranAlem” (BTA) dated 16 February 2010 in which they fully reserved their respective rights in relation to the breaches identified in the Notice of Meeting and in relation to any other breach by BTAI and/or BTA and/or Halyk Bank and/or any other party to any Transaction Document or any Loan Transaction Document (the Reservations of Rights Letter).
5. The Loan Notes Issuer, the Loan Notes Trustee, the Issuer and the Trustee received a letter from Halyk Bank dated 9 March 2010 (the BUS Letter) responding to the Reservations of Rights Letter. In the BUS Letter , Halyk Bank explained why it is currently unable to assume the role of the Servicer in place of BTAI in accordance with the Transaction Documents. The reasons given in the BUS Letter are summarised below:
(a) Halyk Bank’s information technology and payment processing systems are unable to process convertible currency index loans. This might cause operational disruptions and might have material negative impact on the value of the securities.
(b) There are potential risks in relation to collateral enforcement in Kazakhstan.
If Halyk Bank enforced security against a defaulting Debtor, it would be required to pass the proceeds of sale of the collateral to the Purchaser in accordance with the terms of the Back-up Servicing Agreement. If the relevant Debtor subsequently challenged the sale in a Kazakh court, Halyk Bank might be required to refund the proceeds of sale to the Debtor using its own funds.
(c) As BTAI has not paid any withholding tax in relation to cross-border interest payments, Halyk Bank cannot accept the risk of liability to meet any outstanding tax obligations.
(d) The credit files currently held by BTAI may be incomplete and, therefore, not in compliance with the relevant banking regulations. Halyk Bank is not prepared to accept such regulatory risk.
(e) It is uncertain whether an obligation to maintain insurance is enforceable in Kazakhstan. Therefore, Halyk Bank might not be able to comply with the terms of the Back-up Servicing Agreement which requires the Servicer to make certain that all Debtors maintain insurance policies.
(f) An unexpected notice of change of Servicer might create confusion and concern among Debtors and may cause disturbance in payments.
6. A copy of the BUS Letter is available on the website of ATC Financial Services B.V., (the Transaction Manager) at www.atcgroup.com/en/capital-markets/rmbs/kazakh-mbs/104/195/#2010News. The Transaction Manager has been appointed by the Issuer under the Transaction Management Agreement (as such term is defined in the Master Framework Agreement) to provide certain transaction management services to the Issuer in respect of the Transaction. The Transaction Manager has been appointed by the Issuer under the Transaction Management Agreement (as such term is defined in the Master Framework Agreement) to provide certain transaction management services to the Issuer in respect of the Transaction.
7. The Issuer sent a copy of the BUS Letter to BTAI on 16 March 2010 requesting that BTAI provide the Issuer its comments and opinions on the position taken by Halyk Bank as disclosed in the BUS Letter. The Issuer has also informed BTAI on 16 March 2010 that it would be seeking to discuss the matters disclosed in the BUS Letter with the Noteholders.
8. Noteholders are requested to provide any comments they may have on the contents of this announcement to the Issuer’s contact details below.
9. Any capitalised term not defined in this Notice will have the meanings given to them in the master framework agreement dated 29 March 2007 between, inter alios, the Issuer and BTAI (as amended, varied or supplemented and restated from time to time) (the Master Framework Agreement).
10. The Issuer announces that the information specified in paragraphs 4 and 5 above is “regulated information” for the purpose of article 5:25m of the Dutch Financial Supervision Act ( Wet op het financieel toezicht ) .
11. For all enquires contact:
Kazakh Mortgage-Backed Securities 2007-I B.V.
Fred Roeskestraat 123
1076 EE Amsterdam
Contact: Ms. Sheila Razabsekh at sheila.razabsekh@atccapitalmarkets.com
Publication of letter from Halyk Bank dated 9 March 2010 (the BUS Letter) received by the Loan Notes Issuer, the Loan Notes Trustee, the Issuer and the Trustee