BoI offers shares at 55c each in bid to net €1.7bn
BANK of Ireland last night finalised details of its €1.7bn rights issue, offering shareholders the right to acquire three shares for every two they own at 55c a piece.
The price of the share offer represents a 64pc discount on the €1.53 closing price of BoI yesterday.
Five brokerages have been lined up to “underwrite” the rights issue, effectively guaranteeing to take up any shares which cannot be sold on the market. Credit Suisse, Citigroup, UBS, Deutsche Bank and Ireland's Davy are the backers.
An investor who owns 1,000 shares, for example, will have the right to subscribe for 1,500 new shares at a total cost of €825.
The rights issue is the fourth, and final, element of a hugely complicated deal for the bank to raise €3.5bn of capital to shore up its reserves.
Three weeks ago, the group placed €500m of shares with large institutional investors.
The second step involves the State converting €1bn of its €3.5bn of preference shares in the group into ordinary stock, giving it a 36pc stake. BoI raised a further €233m through a debt-for-equity swap, involving some of its riskier bonds.
The three new sets of shareholders are all eligible to participate in the rights issue, which is set to be complete early next month.
As a result, the Government has committed €627m to the rights issue to maintain a 36pc stake.
A further €1.1bn of shares are being sold on the public markets. The large institutional funds and bondholdersturned- shareholders are also expected to take up their rights.
Original shareholders will make up about half of the shareholder base after the transaction, if they all decide to follow their money in the rights issue. The offer will close at 11am on June 8.
BoI's corporate finance arm, IBI, and Credit Suisse have been advising and acting as co-ordinators of the massive deal.
Adding another layer of complexity to the whole transaction, BoI also plans to use some of the proceeds of the rights issue to pay €491m to buy back the Government’s rights, or warrants, to take a quarter stake in the bank in four years.
Shareholders of the group are set to attend an extraordinary general meeting next Wednesday to vote on key elements of the deal.