Bank of Cyprus to seek shareholder OK for €1.34 billion convertibles

By Jennifer Chiou

New York, March 4 - Bank of Cyprus PCL announced that it will look for shareholder authorization to move forward with an issue of up to €1.34 billion of convertible enhanced tier 1 capital securities.

Cyprus Investment and Securities Corp. Ltd. is the lead manager, with Barclays Capital and HSBC Bank plc as joint structuring advisers.

The securities will be offered via a priority right to existing shareholders to subscribe at a rate of €3.00 of the convertibles for every two common shares held, the bank said in a notice dated Feb. 28.

Holders may opt to receive convertibles denominated in dollars. The bank noted that the subscription priority right will be offered in euros and may then be converted to dollars at the close.

For convertibles with coupons denominated in euros, the perpetual convertibles will bear interest at 6.5% until June 30, 2016. Thereafter, the floating interest rate will be set at the beginning of each semiannual period and will equal six-month Euribor plus 300 basis points.

For convertibles with coupons denominated in dollars, the perpetual convertibles will bear interest at 6% until June 30, 2016. After that, the floating interest rate will be set at the beginning of each semiannual period and will equal six-month Libor plus 300 basis points.

The conversion period encompasses the first 15 days of March and September as well as the latter 15 days of May and November of each year, with the first conversion date on Sept. 1, 2011 and the last on May 31, 2016.

The conversion price is €3.30.

The bank may call all but not some of the convertibles at par plus accrued interest on any semiannual interest payment date beginning on June 30, 2016.

The bank can force conversion under certain circumstances. The mandatory conversion price will be the lower of a ceiling price of €3.30 and 80% of the volume-weighted average price of the bank's shares during five business days prior to a viability event notice.

Bank of Cyprus said that eligible shareholders and other applicants may subscribe to the convertible enhanced securities by paying the corresponding consideration either in cash or in the form of eligible securities. These specifically are the convertible bonds due 2013 and 2018 as well as the bank's convertible capital securities and capital securities dated December 2007.

The bank's board said in a company release that with this decision, it is taking into consideration the importance of maintaining high capital adequacy ratios, which stood at 11.9% at Dec. 31.

Based in Nicosia, Cyprus, the Bank of Cyprus is a banking and financial services group.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.