KAF begins one-month tender, exchange for class A notes, class B notes

By Susanna Moon

Chicago, Sept. 7 – Kaerntner Ausgleichszahlungs-Fonds is running offers to purchase or exchange a number of class A instruments and its class B instruments until 11 a.m. ET on Oct. 7.

The purchase price will be 75% of par for class A notes and 30% of par for class B notes.

In the exchange offer, the exchange ratio for zero-coupon bonds will be 1 to 1 for the class A instruments and 2 to 1 for the class B instruments. For the zero-coupon assignable loans, it will be 1 to 1 for the class B instruments.

The exchange value will be 90% of adjusted specified denomination for the class A instruments and 45% of the adjusted specified denomination for the class B instruments.

The fund would spend about €7.79 billion in the tender assuming all holders accept the cash offer, according to a notice by the Worthersee, Austria-based company.

For the exchange, assuming all holders accept the exchange offer and elect to receive zero-coupon bonds, the aggregate principal amount would be €10.48 billion. Assuming all holders accept the exchange offer and all class B holders elect to receive 0% assignable loans, the aggregate principal amount of zero-coupon bonds would be about €10.01 billion, and the aggregate principal amount of zero-coupon assignable loans will be about €920 million. Part of this total amount, in the amount of €1.2 billion, constitutes a compensation payment.

Tender instructions must be received by the tender agent no later than 11 a.m. ET on Oct. 5.

The tender offers began Sept. 6, with settlement set for Oct. 12.

The fund is making the offers “in the interest of the stability of the Austrian financial markets and to ensure the economic balance and sound public finances in Austria,” the release said.

The purpose of the offers to acquire the instruments is to allow holders “to satisfy their claims arising from the statutory deficiency sureties.”

KAF began offers to acquire some HETA Asset Resolution AG claims from creditors for which the province of Carinthia, Kaerntner Beteiligungsverwaltung and the fund Sondervermoegen Kaernten as the legal successors of Kaerntner Landes- und Hypothekenbank Holding are statutorily liable as deficiency guarantors, according to a separate notice.

Citibank, NA, London Branch (+44 20 7508 3867 or exchange.gats@citi.com) is the tender agent. Citigroup Global Markets Ltd. (+44 207 986 8969 or liabilitymanagement.europe@citi.com) and J.P. Morgan Securities plc (+44 207 134 2468 or emea_lm@jpmorgan.com) are the offer agents.

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