Hellenic Bank and the Cyprus-Co-op Bank have signed a business transfer agreement that effectively seals the acquisition of the good part of the co-op by Hellenic.
Announcing the signing of the agreement on Monday night, Hellenic Bank also said that it had entered into a subscription agreement with BRAVO Strategies III in connection with the associated capital raise. BRAVO belongs to Pimco.
Hellenic also said that an EGM will be held in July with the acquisition expected to be completed in September at the earliest.
The subscription by BSIII is dependent upon shareholders approving at the EGM a resolution dis-applying their pre-emption rights in respect of the shares to be placed with BSIII. The subscription is also conditional upon certain conditions precedent, including the execution of the acquisition agreements, the receipt of certain regulatory approvals and the gross proceeds of the capital raise not being less than €150m.
Hellenic will proceed with an equity capital raise of €150m at a subscription price of €0.70 per share in cash of which €100m will be via a pre-emptive rights issue and €50m will be via a private placement to BSIII. The latter represents 17.3% of the share capital following completion of the capital raise.
The capital raise is conditional on EGM approval. The private placement is also conditional upon shareholders approving a resolution dis-applying their pre-emption rights in respect of such shares.
As part of its plans for a capital increase, Hellenic has agreed with Demetra Investment that it will subscribe for up to €50m in the pre-emptive rights issue. Demetra has committed to subscribe for its pro rata share of the pre-emptive rights issue. To the extent that shares are not subscribed for by other holders in the pre-emptive rights issue, Hellenic has agreed to allocate to Demetra such number of additional shares as are necessary for Demetra to have a 20.1% shareholding at completion of the Capital Raise (provided that the number of unsubscribed shares will be available – in all other cases Demetra’s shareholding will be lower than 20.1%).
The Board of Directors may, at its full discretion, allocate to Demetra any further shares not subscribed for in the pre-emptive rights issue up to, including other shares subscribed for by it in the Capital Raise, the total amount of €50m (provided that the number of unsubscribed shares will be available – then Demetra’s shareholding will range between 20.1% and 22.1%). The subscription by Demetra is conditional upon the completion of the acquisition, the passing of the shareholder resolution approving the issue of shares comprising the Capital Raise, and the receipt of certain regulatory approvals, Hellenic added.
Hellenic also said that it had received irrevocable undertakings from each of Demetra, Third Point Hellenic Recovery Fund L.P. and Wargaming Group Limited to approve the capital increase and the dis-application of pre-emption rights in respect of, in aggregate, 121,159,185 shares, representing approximately 61.0% of the issued share capital of the company as at the date of this announcement.
The irrevocable undertakings will cease to have effect, among other things, if the EGM does not occur prior to 31 December 2018 or if BSIII’s agreement is terminated prior to the EGM.
Subject to shareholder approval at an EGM, expected to take place by the end of July 2018, and subject to all relevant regulatory approvals being obtained, the acquisition is expected to complete, at the earliest, during September 2018 and the capital raise is expected to take place during the fourth quarter of 2018.
Under the deal, Hellenic will acquire a total balance sheet of €10.3b of assets (or €10.0b after fair value and other adjustments), as well as certain business of CCB related to the acquisition perimeter.
The balance sheet comprises of a portfolio of primarily performing loans (net loans: €4.6b), Cyprus Government Bonds (€4.1b), cash (€1.6b), customer deposits (€9.7b) and certain other current liabilities and assets.
The terms of the acquisition will include an asset protection scheme provided by CCB. CCB’s obligations under the APS, the BTA and a transitional services agreement between Hellenic and the CCB will be guaranteed by the Republic of Cyprus pursuant to a guarantee agreement to be entered into prior to the completion of the acquisition.
Hellenic has agreed to pay CCB €74m in cash as a consideration for the net asset value of the acquisition perimeter, which is €247m.