Bank of Latvia

05 Nov 1999

SIMMONS & SIMMONS ADVISES ON MAJOR CROSS BORDER REHABILITATION OF A LATVIAN BANK

SIMMONS & SIMMONS ADVISES ON MAJOR CROSS BORDER REHABILITATION OF A LATVIAN BANK

A banking team at Simmons & Simmons acted for Bank of Latvia, the Latvian central bank and regulator, in connection with the rehabilitation of Rigas Komercbanka PLC, one of the main Latvian commercial banks, which went into administration in March of this year.

The rehabilitation involved the restructuring of approximately US$68 million of bank debt and approximately US$31 million of deposits. Over 1100 depositors were brought into the restructuring documentation. Approximately 50 per cent. of the commercial bank debt and amounts owed to depositors was converted into equity in the Bank. The Government of Latvia and the European Bank for Reconstruction and Development ("EBRD") took equity participations in the Bank. New facilities were provided to the Bank by EBRD and Bank of Latvia.

The transaction gave rise to a number of complex issues including those relating to debt/equity conversion, security, priorities and inter-creditor arrangements. A number of Latvian law issues required innovative approaches to the way in which the transaction was structured. Ultimately a change of law was required to be passed by the Latvian Parliament to enable the rehabilitation to proceed.

Komercbanka obtained a declaration of solvency from the Court of Latvia on 13 September 1999 and reopened for business on 26 October 1999.

The Simmons & Simmons team comprised banking partner Charles Goodall and assistant Stephen Kozak.

Clifford Chance acted for the two syndicates and EBRD and Freshfields acted for Komercbanka.

ENDS

Notes for editors:

1. Simmons & Simmons is worldclass law firm with offices in London, Paris, Brussels, Düsseldorf, Lisbon, Milan, Rome, Madrid, Abu Dhabi, Hong Kong, Shanghai and New York with over 1,400 staff worldwide. For further information on Simmons & Simmons please visit our website at www.simmons-simmons.com.

2. The Banking and Capital Markets Department at Simmons & Simmons comprises 13 partners plus over 50 lawyers in London. It advises on capital markets, securitisation, structured financing, corporate treasury, corporate trustee and banking work in the UK and overseas.