Bank of Ireland launches tender offer for legacy perpetual instruments

By Mary-Katherine Stinson

Lexington, Ky., June 21 –Bank of Ireland Group plc and subsidiaries are inviting holders of its legacy perpetual instruments to tender any and all their holdings at a premium, according to a press release.

As part of a review of its capital structure the bank is seeking to retire the instruments, all issued between 1991 and 1997, as they no longer qualify as regulatory capital, and such instruments are no longer issued by the group. The bank further noted that the instruments are complex both operationally and from a regulatory standpoint and do not benefit from a liquid trading market.

Instruments

The instruments covered in the offer are as follows:

• 12.625% non-cumulative sterling preference stock (ISIN: IE0000730808) of £1.00 each of the Governor and Co. of the Bank of Ireland according to an invitation by Bank of Ireland Nominee 3 Ltd.;

• 12% non-cumulative euro preference stock (ISIN: IE0000730790) of €1.27 each of the Governor and Co. of the Bank of Ireland according to an invitation by Bank of Ireland Nominee 3 Ltd.;

• 8.125% non-cumulative non-redeemable preference shares (ISIN: GB0000510205) issued by Bristol & West plc according to an invitation by the Governor and Co. of the Bank of Ireland; and

• 13.375% perpetual subordinated bonds of Governor and Co. of the Bank of Ireland according to an invitation by the issuer acting through its UK branch.

Pricing: 12.625% preferreds

The pricing details for the sterling preference stock is as follows: for the £1,876,090 outstanding 12.625% non-cumulative sterling preference stock the company is offering to purchase any and all of the stock at 183, or £18.3 for each £1 of stock, plus a payment of in lieu of the dividend of 4.9462%, or £0.49462 for each £1 of stock, tendered prior to the general expiration deadline or a payment of in lieu of the dividend of 6.1223%, or £0.61223 per £1 of stock, for stock tendered after the general expiration deadline but before the retail expiration deadline.

This amounts to a total premium payment at 187.9462, or £18.79462 for each £1 of sterling preference stock, for those tendering applicable to the expected early settlement date or a total premium payment at 189.1223, or £18.91223 for each £1 of sterling preference stock, for those tendering applicable to the expected retail settlement date.

Pricing: 12% preferreds

The pricing details for the euro preference stock is as follows: for the €3,842,987 outstanding 12% non-cumulative euro preference stock the bank is offering to purchase any and all of the stock at 178.9764, or €22.73 for each €1.27 of euro preference stock, plus a payment of in lieu of the dividend of 4.7014%, or €0.59707 for each €1.27 of euro preference stock, tendered prior to the general expiration deadline or a payment of in lieu of the dividend of 5.8192%, or €0.73904 per €1.27 of euro preference stock, tendered after the general expiration deadline but before the retail expiration deadline.

This amounts to a total premium payment at 183.6777, or €23.32707 for each €1.27 of euro preference stock, for those tendering applicable to the expected early settlement date or a total premium payment at 184.7956, or €23.46904 for each €1.27 of euro preference stock, for those tendering applicable to the expected retail settlement date.

Pricing: 8.125% preferreds

For the £32,593,734 of the 8.125% Bristol & West shares, the bank is offering to purchase the shares at 117.5, or £1.175 for each preference share, plus a payment of in lieu of the dividend of 1.313%, or £0.01313 per share, tendered prior to the general expiration deadline or a payment of in lieu of the dividend of 2.070%, or £0.02070 per share, for stock tendered after the general expiration deadline but before the retail expiration deadline.

This amounts to a total premium payment at 118.813, or £1.18813 per share for those tendering applicable to the expected early settlement date or a total premium payment at 119.57, or £1.1957 per share, for those tendering applicable to the expected retail settlement date.

Pricing: 13.375% preferreds

For the outstanding £45,903,600 of the £75 million 13.375% Governor and Co. bonds, the bank is offering to purchase any and all of the bonds at 188, or £1,880.00 per £1,000 of principal, plus 4.031%, or £40.31 for each £1,000 of principal, in accrued interest. This amounts to a total purchase price of 192.031, or £1,920.31 per £1,000 of principal.

Solicitation

As part of the offers, the group is also launching a consent solicitation asking holders of the 13.375% Governor and Co. bonds to vote on a resolution to insert a call option into the terms and conditions, which will then allow the bond redemption.

Governor and Co. bondholders have three options: they may tender their bonds triggering an automatic vote in favor of the consent solicitation, vote on the consent solicitation or take no action.

The amount that is received by the Governor and Co. bondholders is dependent on whether the vote is favorable and whether the bondholder tendered their bonds or voted separately by each of the relevant deadlines.

If the vote in favor of Governor and Co. redeeming the bonds is successful, then the bonds will not be purchased according to the terms of the tender offer and all of the bonds will instead be redeemed on the redemption date.

If the vote is in favor of redeeming the bonds, bondholders who voted yes, including through the tendering of their bonds, will receive the purchase price of 192.031 plus a voting fee of 2%, or £20 per £1,000 of principal, for a total purchase price of 194.031, or £1,940.31 for each £1,000 of principal. Bondholders who do not vote will not receive the 2% voting fee.

If the vote in favor of redeeming the bonds is unsuccessful, tendering bondholders will receive the total tender consideration of 192.031 per £1,000 of principal. No voting fee will be paid.

Bondholders that do not tender their bonds in the tender offer will not receive any payment if the vote is unsuccessful.

Details

The general expiration deadline is expected to be 1 p.m. ET on June 29, with early settlement slated for July 13, and the retail expiration deadline is expected to be 1 p.m. ET on Aug. 2, with retail settlement scheduled for Aug. 16.

D.F. King Ltd has been appointed as retail information agent for all offers. The terms of the offers and contact details are available at https://www.dfkingltd.com/boi/.

Computershare Investor Services (Ireland) Ltd. is acting as receiving agent for the preference stock and Link Market Services Ltd. is the receiving agent for the Bristol & West preference shares and the Governor and Co. bonds.

J&E Davy ULC, Jefferies International Ltd., Lloyds Bank Corporate Markets plc and UBS AG London Branch have been appointed as dealer managers for the purposes of the offers to institutional investors.

The issuer is based in Dublin.

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