Japonica unit lifts tender cap for Greek bonds, cuts minimum price

By Susanna Moon

Chicago, July 1 - Japonica Partners & Co. said indirect wholly owned subsidiary Yerusalem Hesed, Ltd. amended and extended provisions of the unmodified Dutch tender offer for some series of Greece government bonds that began June 12.

The company increased the maximum amount of bonds it will purchase to €4 billion and reduced the minimum purchase price to 40% of par, according to a press release.

The offer also was extended to 11 a.m. ET on Aug. 1, with settlement set for Aug. 6.

The amendments reflect developments such as prospective debt haircuts, Greece government intra-coalition relations, reports of a potential €3 billion to €4 billion funding gap, privatization revenue shortfalls, reports of a €1.2 billion health care cost funding gap, the ERT closure and concerns regarding quarter-end portfolio performance markings for the illiquid securities, the company said.

The minimum purchase price reflects the company's opinion of fair price from an intrinsic value perspective for institutional blocks at this point in time, according to the press release.

Japonica said it continues to believe that the market for Greece government bonds is volatile, highly illiquid and at any time not necessarily reflective of the bonds' intrinsic value.

Since the offer was announced, there was a 21% drop in average price during a 14-trading day period with a 30-day price volatility of 36.7% as of the last day of the period, the release noted.

As announced previously, the offer does not use a binary tender offer structure of one price for all at the end of the tender.

The company said it may at any time purchase the bonds in the open market, in privately negotiated transactions or otherwise and at prices that may be higher or lower than the purchase prices, on terms more or less favorable than those of the offer, from any holder, without notification or announcement.

To clarify, the company said it reserves the right to pay lower prices for successive purchases in privately negotiated transactions or otherwise before the offer expires.

Japonica is an investment firm based in Providence, R.I.

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