Piraeus Bank accepts all preferreds and 2016, 2017 notes for exchange

By Marisa Wong

Morgantown, W.Va., Nov. 6 – Piraeus Bank SA said it accepted all securities for which exchange instructions were delivered by the expiration of its exchange offer.

The company announced the results of its exchange offer following bondholders meetings in London on Friday.

As previously announced, the company offered to exchange any and all of three series of securities for non-transferable receipts until 4 a.m. ET on Nov. 4, with settlement set for Nov. 9. The offers began on Oct. 15.

Piraeus offered to exchange any and all of the following outstanding securities:

• €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.

Exchange instructions were received for €8,487,000 of the perpetual securities, €167,068,000 of the 2016 securities and €317,194,000 of the 2017 securities, according to a notice on Friday.

The bank said that the final aggregate liquidation preference of existing securities accepted for exchange will be €16,249,000 for the perpetual preferreds, €211,244,000 for the 2016 securities and €365.2 million for the 2017 securities.

More details

In a notice Oct. 15, 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 previously 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 had said.

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 were 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, a prior press release noted.

The extraordinary resolutions were passed at the bondholder meetings on Friday, according to the latest notice.

Previously, the bank said that holders had submitted instructions for the proposal as follows:

• For the preferred perpetual floaters, €8.59 million in favor of the proposal and €705,000 voting against;

• For the step-up floaters due 2016, €168,671,000 in favor of the proposal, with €168.48 million from eligible noteholders, and €13,505,000 voting against; and

• For the 5% notes due 2017, €317,394,000 in favor of the proposal and €12,472,000 voting against.

For the 2016 notes, holders representing €50,000 indicated that they intended to attend the relevant meeting, a prior release noted.

The bank said before 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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