Aeolus looks to liquidate underlying asset for credit-linked floaters

By Susanna Moon

Chicago, Aug. 16 - Aeolus CDO Ltd. said that it has asked holders of its €49.7 million of class A secured credit-linked floating-rate notes due 2066 to approve modifying conditions for redeeming the class A notes as well as five other secured credit-linked note series.

The company is proposing to redeem all of the floaters on the amended maturity date of Sept. 19, 2011.

The five other note series covered by the resolution are as follows:

• €25 million of class B floating-rate notes due 2066;

• class C €12.5 million of class C deferrable interest floating-rate notes due 2066;

• €13.8 million of class D deferrable interest floating-rate notes due 2066;

• €9.5 million of class E deferrable interest floating-rate notes due 2066; and

• €15.5 million of subordinated floating-rate notes due 2066.

The issuer plans to liquidate the underlying assets and use proceeds to redeem the notes, according to an issuer notice to noteholders.

Under the proposed terms, holders will receive only what's available from liquidation if the proceeds are inadequate to cover the costs of the redemption.

Aeolus will seek consent through an extraordinary resolution at a meeting on Sept. 7.

The redemption of the notes on the amended maturity date requires the approval of each class of notes.

The issuer said it expects holders of the class B notes, the class C notes and the class D notes to approve the redemption either at a separate meeting to be held on Sept. 7 or, if necessary, at an adjourned meeting.

Holders of the class E notes and the subordinated notes are expected to approve the redemption by written resolutions.

The measures also require the approval of the CDS counterparty, which is expected by the amended maturity date.

The Bank of New York Mellon is the principal paying agent and J.P. Morgan Bank (Ireland) plc is the paying agent.

BNY Mellon Corporate Trustee Services Ltd. is the trustee.

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