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Due to recent materially inaccurate public reporting, PrivatBank requires to make a corrective statement regarding the ongoing LCIA arbitration proceedings concerning its Eurobonds issued in 2010 and 2013. PrivatBank limits the scope of this statement in view of the confidentiality restrictions that apply under the LCIA Rules, but is cognizant of the importance of ensuring accurate public reporting concerning its securities.
On 13 June 2019, the Tribunal in each of the relevant LCIA proceedings issued a Partial Final Award (the Awards) following a final hearing of certain aspects of the case earlier in the year. That hearing concerned PrivatBank’s case that both issuances and Notes were affected by illegality in various respects connected with its former owners (the Former Owners), related companies of theirs and the manner in which the securities in question were issued, acquired and subsequently traded.
The effect of those Awards is not to impose any obligation on PrivatBank to make any payment in respect of either the 2010 or 2013 Notes. Another aspect of PrivatBank’s defence to the claims has yet to be determined. As things stand, there is no certainty as to whether and, if so, when PrivatBank would come to be required to make any payments under the Awards. Even if PrivatBank is ever required to make any payment, the effect of the Awards is that such payments will be substantially less than the sums claimed.
In its Awards, the Tribunal upheld PrivatBank’s case on illegality and consequently ruled that Privatbank would not be required to make payment in respect of the ultimate interests in either 2010 or 2013 Notes held by or for the benefit of certain entities proven to be connected to the Former Owners.
Furthermore, the Tribunal imposed a mechanism for the Trustee to publish Notices calling for unknown ultimate account holders to identify themselves to the Trustee and to provide identifying documents / information in order to enable PrivatBank and the Tribunal to assess whether the Former Owners are their beneficiaries. If so, those ultimate account holders would also be excluded from payment under the Awards; as would any ultimate account holders who failed to respond to the Trustee’s Notices within a stipulated time period of 60 days from publication. Only those minority of ultimate account holders within the so-called Instructing Group who are instructing the Trustee in the LCIA proceedings and who have been shown not to be affected by illegality in connection with their holdings of Notes were found by the Tribunal definitely to be entitled to payment under the Awards, subject to PrivatBank’s other defence.
As an overriding matter, however, the Tribunal also ruled that, until another aspect of PrivatBank’s defence to the claims has been determined in due course (which the Tribunal has adjourned for the time being), and only in the event that that defence comes to be dismissed by the Tribunal, would the Awards become operative. As things stand, therefore, the Awards are wholly contingent insofar as they provide for any payments by PrivatBank in respect of the Notes. Additionally, the Trustee has since brought proceedings before the English Court in relation to those awards. Those applications are confidential. However, until those applications have been determined, which is expected during 2020, the position with regard to the Awards themselves remains uncertain.