Piraeus offers to exchange three series, skips dividend on preferreds

By Susanna Moon

Chicago, Oct. 15 – Piraeus Bank SA said it began separate offers to exchange any or all of three series of securities for non-transferable receipts.

Piraeus is offering to exchange any and all of the following outstanding securities, according to a bank notice:

• €16,249,000 of series A floating-rate non-cumulative guaranteed non-voting preferred securities of Piraeus Group Capital Ltd. with a coupon of Euribor plus 225 basis points;

• €211,244,000 of subordinated callable step-up floating-rate notes due 2016 of Piraeus Group Finance plc with a coupon of Euribor plus 185 bps; and

• €365.2 million of 5% notes due March 2017 of Piraeus Group Finance plc.

In a separate notice, Piraeus Group Capital said it will forgo paying a dividend on its €200 million series A floating-rate perpetual preferreds, which have a subordinated guarantee from Piraeus Bank. The dividend would have been paid on Oct. 27.

The exchange offers are intended to strengthen the company’s capital base, which has been hurt by the impaired macro-economic conditions in Greece that are affecting all Greek financial institutions, the bank said.

The exchange offers also reflect the fact that if the bank garners state aid, “burden-sharing will need to be achieved to the maximum extent possible through contributions by holders of equity, hybrid capital and subordinated debt of the offeror,” the bank said.

The exchange offers will end at 4 a.m. ET on Nov. 4 with settlement set for Nov. 9.

Holders will be asked to pass proposals at separate meetings to be held on Nov. 6 in London.

The non-transferable receipts represent the rights of the holders to choose among three options:

• Cash, which will be the nominal amount represented by the relevant non-transferable receipts multiplied by the relevant cash price plus any interest on the existing security and accrued interest; the cash price will be 43% for the 2017 securities, 9% for the 2016 securities and 9% for the perpetual securities;

• Shares, with the amount to be the sum of the nominal amount represented by the non-transferable receipts multiplied by the relevant share ratio plus any interest on the existing security and accrued interest; the share ratio will be 100% for the 2017 securities, 100% for the 2016 securities and 50% for the perpetual securities; or

• In the case of non-permitted equityholders only, the cash resale amount.

The exchange offers are conditioned on the proposal being passed for the 2017 securities and the 2016 securities and the relevant supplemental fiscal agency agreement being entered into or, in the case of the perpetuals, the shareholder special resolution being passed, the press release noted.

The bank said it is also considering other means to facilitate meeting the Directorate General for Competition’s requirements for burden-sharing including the substitution of Piraeus Group Finance plc with another entity as issuer of the securities.

The structuring banks and dealer managers are Deutsche Bank AG, London Branch (+44 20 7545 8011 or liability.management@db.com) and UBS Ltd. (+44 20 7568 2133 or ol-liabilitymanagement-eu@ubs.com). Credit Suisse Securities (Europe) Ltd. (+44 20 7883 8763 or liability.management@credit-suisse.com) is a dealer manager. The exchange agent is Lucid Issuer Services Ltd. (+44 20 7704 0880 or piraeus@lucid-is.com).

Piraeus Bank is a financial services company based in Athens.

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