Banco de Galicia announces restructuring results

New York, May 10 - Banco de Galicia y Buenos Aires SA announced the results of its two-stage debt restructuring.

Banco de Galicia said creditors holding $1.3209 billion of its debt or 98.2% participated in the restructuring.

Based on the final amounts tendered, the bank will issue:

* $635.7 million of long-term instruments, of which $452.1 million will be dollar-denominated notes due 2014;

* $400.0 million of medium-term instruments, of which $349.8 million will be dollar-denominated notes due 2010; and

* $225.9 million of subordinated instruments, of which $214.2 million will be dollar-denominated subordinated notes due 2019.

Banco de Galicia also announced that it will apply $42.4 million not used in the cash tender offer and bank debt restructuring to prepay at par plus accrued interest on a pro rata basis the long-term instruments to be issued in the restructuring.

The bank will also pay $13.6 million to creditors participating in the cash tender offer and the similar offer in the concurrent bank debt restructuring.

In addition, $57.1 million of Bodens due 2012 will be transferred to creditors participating in the Boden tender offer and the bank debt restructuring.

The bank will also pay $16.4 million of accrued interest.

The only part of the second stage of the exchange that was oversubscribed was the equity participation offer. As a result, the equity participation offer will be subject to pro ration at a factor of 45.6%. Creditors who selected this option will receive a combination of medium-term instruments and preferred shares or, in lieu of preferred shares, cash, if any, paid to Grupo Galicia by existing shareholders participating in the rights offering.

If these creditors did not select an alternative tender option, they will receive a combination of long-term instruments and subordinated instruments for units not accepted in the equity participation offer as a result of the oversubscription.

The specific amount of preferred shares and cash to be received under the equity participation offer depends on the outcome of the rights offering to existing shareholders, which is set to expire on May 17.

Settlement is expected on May 18.

The Buenos Aires, Argentina, bank announced on Dec. 23 that it was offering to exchange the 9% notes and floating-rate notes for cash, Bonos del Gobierno Nacional due Aug. 3, 2012 issued by the Republic of Argentina (Boden 2012) or new securities.

As the first step, the bank is offering to exchange the notes for an equal principal amount of units. The units will be made up of dollar-denominated notes due 2014 and dollar-denominated notes due 2019 at the rate of 75% of the 2014 notes and 25% of the 2019 notes.

Noteholders will also have the option to participate in the second stage in which they can trade their units for either:

* A combination of the bank's dollar-denominated notes due 2010 and restricted preferred shares of Grupo Financiero Galicia SA, the bank's parent company, that will be mandatorily convertible into restricted class B shares of Grupo Galicia on the first anniversary of their issuance or, if earlier, on a change in control of Grupo Galicia; or

* Notes due 2014; or

* Cash; or

* Boden 2012s.

In each case except for the 2014 notes, the value of the securities or cash received will be less than the face amount of the existing notes.

Holders will be able to retender any units not accepted in the second stage due to pro ration and pick a different option.

Banco de Galicia will pay accrued interest on the existing notes in cash and additional units.

The bank is also requesting authorizations to file an Acuerdo Preventivo Extrajudicial which, if approved by an Argentine bankruptcy court, would compel holders of the existing notes and Banco de Galicia's bank, multilateral agency and trade finance creditors who did not participate in the exchange or the concurrent bank debt restructuring to receive units or similar instruments in exchange for their debt.

Banco de Galicia noted it is in default on the notes and most of its foreign debt.

The bank debt restructuring and the exchange offer are subject to 95% of the principal amount of the existing notes and bank debt being tendered.

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