Depfa Funding IV to repurchase and cancel €500 million preferreds

By Wendy Van Sickle

Columbus, Ohio, Oct. 26 – Depfa Funding IV LP will repurchase and cancel €500 million of fixed-rate/variable-rate non-voting non-cumulative perpetual preferred securities issued on March 21, 2007 guaranteed by Depfa Bank plc, according to a notice.

In January 2015, Depfa Bank parent FMS Wertmanagement AoR launched a tender offer inviting holders of the preferreds to tender those securities for purchase by FMS.

In that offer, which ended on May 18, 2015, 99.9% of the preferreds were tendered to and purchased by FMS.

At a meeting of holders of the preferreds on May 20, 2015, a clear majority voted in favor of facilitating the purchase by Depfa of all the preferreds that were not tendered to and purchased by FMS.

As a result, €499.25 million of the preferreds are held by FMS and €750,000 are held by Depfa.

The boards of FMS and Depfa have approved the sale to and repurchase by Depfa Funding IV of the preferreds on a reverse enquiry basis and at fair value.

Pricing will be conducted on an arm’s length basis and assessed at fair market value determined on Nov. 15 with settlement expected to take place on Nov. 19, according to the notice.

A final price validation for the transaction will be performed by an independent third party.

FMS and Depfa, as holders of the preferreds, have consented to the terms and conditions of the preferred securities being amended to facilitate their repurchase and cancellation.

FMS was established in 2010 as a German state-owned wind-down agency in order to wind up risk positions and non-strategic operations with an aim of maximizing the value of the relevant assets.

FMS took ownership of Depfa in December 2014. The strategy of Depfa is to continue to wind down its balance sheet and those of its subsidiaries in a manner designed to maintain value.

Completion of the repurchase and cancellation of the preferreds is a further step in the wind-down plan of the Depfa group, according to the notice.

Depfa is a financial services company based in Munich.

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