Bahrain's Gulf International Bank plans not to call floaters, launches Dutch auction tender offer

By Angela McDaniels

Tacoma, Wash., June 17 - Gulf International Bank BSC began a modified Dutch auction tender offer for its $400 million subordinated step-up floating-rate notes due 2015 and said it does not plan to call the notes on their call date falling in September 2010.

The decision not to exercise the call option is due to prevailing adverse market conditions and economic conditions, according to a bank news release.

The notes will be callable on any interest payment date after the September 2010 call date. The bank said it will review its decision not to call the notes from time to time in light of market conditions and its financial position.

Tender offer

The price range for the tender offer is $770 to $1,000 per $1,000 principal amount of notes.

The bank will select the lowest price equal to or above the minimum purchase price that will allow it to purchase up to $100 million principal amount of notes.

Noteholders will also receive accrued interest up to but excluding the settlement date.

The offer will expire at noon ET on June 26. The purchase price will be announced on June 29, and the settlement date is expected to be July 1.

The bank said it is seeking to take advantage of the prevailing market conditions to repurchase some of its debt at a price below par value, with the aim of reducing its overall debt and further strengthening its financial position.

The dealer managers are Barclays Bank plc (call liability management group at +44 0 20 7773 8575) and J.P. Morgan Securities Ltd. (call Osama Al-Adhamy or Marc Lewell at +44 0 20 7325 5266 or +44 0 20 7779 2468).

The information agent is Lucid Issuer Services Ltd. (call Yves Theis at +44 0 20 7704 0880).

The bank is based in Manama, Kingdom of Bahrain.

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