February 8, 2018 / 1:24 PM / in 17 days

UPDATE 1-Russian Standard Ltd creditors to start legal action on defaulted bond

(Adds background, detail)

LONDON, Feb 8 (Reuters) - An ad-hoc creditor group holding a defaulted Russian Standard Ltd 2022 Eurobond is planning to call the notes due and start court proceedings, a member of the group said on Thursday.

Russian Standard Ltd, a company linked to Rustam Tariko who owns Russian Standard Bank, defaulted on the Eurobond coupon payment which had been due on Oct 27. The bond was secured by a 49-percent stake in Russian Standard Bank.

“The first step is to accelerate the notes, the second step is to start court proceedings in Russia to enforce the pledged shares,” said the member of the creditor group, speaking on condition of anonymity.

The ad-hoc group consists of five parties from the United Kingdom, Russia, the United States and Switzerland, holding altogether 27.5 percent of the issue - above the 25 percent threshold needed to take such action - the source said.

The bond has $451 million outstanding and was last bid at 22 cents in the dollar, according to Thomson Reuters data.

Once proceedings are under way, the ad-hoc group plans to request an audit of Russian Standard Bank, the source added.

Russia’s banking sector has come under scrutiny in recent months after the central bank was forced to rescue B&N Bank and Otkritie, two of the country’s biggest private lenders.

Both Russian Standard Bank and a representative of Tariko declined to comment. Tariko also has interests in the vodka trade. (Reporting by Karin Strohecker and Claire Milhench in London and Tatiana Voronova in Moscow; editing by Andrew Roche)

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