BoI warns investors to buy shares or lose bank to state control
Published 09/07/2011 | 05:00
BANK of Ireland will remain outside majority state ownership, even if half its shareholders don't take up their entitlements to buy new shares in the PLC's €1.91bn rights issue.
Details on BoI's €5.2bn capital-raise, revealed last night, show the bank needs to convince 49pc of its private shareholders to 'follow their money' in order to keep the State's stake below the crucial 50pc mark.
If private investors refuse to buy new shares, then the State takes up all leftover stock, pushing its stake to 69.7pc -- effectively nationalising BoI.
The deal unveiled last night allows shareholders to buy 18 shares for every five they own at a 16pc discount to last night's closing price of 12pc. The State, with a 36pc stake in BoI, will have the same entitlement.
BoI said a number of "private equity firms" proposed "material investments".
It is understood that talks between the Department of Finance and possible private equity investors are ongoing.
If any deal is struck, the new investors are likely to take up some of the State's entitlement.
BoI yesterday said some 74.3pc of bondholders who'd been asked to exchange their bonds for heavily discounted amounts of cash and shares had signed on the dotted line, raising about €2bn in capital.
The remaining 25.7pc, who own bonds with a face value of about €600m, are likely to be targeted by the Finance Minister under new laws to force losses on bondholders.