HSBC solicits consents from holders of bonds due 2023, 2025

By Wendy Van Sickle

Columbus, Ohio, Nov. 29 – HSBC SFH is soliciting consents from holders of its €1.25 billion 2% covered bonds due Oct. 16, 2023 (ISIN:FR0011470764) and its €1 0.5% bonds due April 17, 2025 and extendible as floating-rate covers bonds to April 17, 2026 (ISIN: FR0013329638), according to a news release.

On June 18, , HSBC Continental Europe signed a memorandum of understanding with Promontoria MMB SAS, its subsidiaries Banque des Caraibes SA and My Money Bank — all of which are under the control of funds and accounts managed or advised by Cerberus Capital Management LP — regarding the potential sale of its retail banking business in France which includes HSBC Continental Europe’s 100% ownership interest in the issuer.

On Nov. 25, HSBC Continental Europe, Promontoria MMB SAS and Banque des Caraibes SA entered into a framework agreement whereby HSBC Continental Europe would transfer its full ownership interest in the issuer and most of its rights and obligations under the program documents to which it is a party, including in its capacity as borrower, administrator, issuer calculation agent and cash collateral provider, to Banque des Caraibes SA and/or any other entity within My Money Group.

The company is seeking to pass three resolution for the 2025 bonds and four for the 2023 bonds.

The resolutions covering bond bonds include

• A resolution to approve the transfer and all consequential amendments to the program documents and conditions. In particular, HSBC Continental Europe (formerly HSBC France), as the majority shareholder of the issuer, has undertaken pursuant to a letter in favor of the bondholders not to permit any amendments to the program documents other than as expressly permitted or contemplated under the program documents or without the prior representative consent and prior rating affirmation; not to sell, transfer, lease out or otherwise dispose of, in one or more transactions or series of transactions the whole or any part of the shares of the issuer it owns; to take any necessary steps, which are available to it as shareholder, to remain majority shareholder of the issuer.

In addition, HSBC Bank plc, acting through its Paris Branch, under the same letter of undertaking has undertaken in favor of the bondholders, not to permit the Issuer to cease to be consolidated within the tax group formed under the French Code, with HSBC Bank plc, acting through its Paris Branch as head of that tax group, and not to amend the tax consolidation agreement between HSBC Bank plc, acting through its Paris Branch and the issuer without prior rating affirmation.

The bondholders are therefore requested to waive any undertaking made by HSBC Continental Europe to their benefit in any such program documents in the context of the transfer including the undertakings in relation to any rating affirmation and/or representative consent; and

• Technical resolutions relating to filing of the documents relating to the meeting of each series and granting capacities for formalities.

The resolution that pertains only to the 2023 bonds approves the appointment of a new representative and new alternative representative and determining their compensation, following the resignation of BNP Paribas and Frederic Krantz.

For the 2023 notes, bondholders will receive on the first consent payment date a consent fee of 10 basis points for the bonds for which they cast their votes and a further 5 bps fee on the second consent payment date.

For the 2025 notes, bondholders will receive on the first consent payment date a consent fee of 20 bps for the bonds for which they cast their votes and a further 5 bps fee on the second consent payment date.

The 2023 meeting will be held at 4 p.m. ET on Dec. 10.

The 2025 meeting will be held at 5 p.m. ET on Dec. 10.

Credit Agricole CIB (+44 20 7214 5733 or liability.management@cacib.com) and (+44 20 7992 6237 or LM_EMEA@hsbc.com).

The banking and financial services company is based in London.

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