Saturday 21 April 2018

Hedge funds fight BoI plan to impose losses on bondholders


Donal O'Donovan

A GROUP of hedge funds holding nearly €700,000 of Bank of Ireland's subordinated bonds has formed a committee to fight the bank's plan to force losses on them.

Bank of Ireland has offered to buy back its €2.6bn of subordinated bonds at cash prices of 10 cent and 20 cent in the euro.

It will pay double that for bondholders opting to be paid in shares.

Now, the bondholder group has hired White & Case as its legal adviser. It says its members have enough bonds to block the planned bond buyback and debt-for-equity swap.

The hedge funds are seeking better terms and want to be allowed to invest in the bank directly in order to end up with a bigger stake than that envisioned in the current plan.

In a statement, the group said it was seeking immediate discussions with representatives of the Department of Finance and the bank, adding: "If (our) interests are to be converted to equity, the committee seeks to convert such interests on fair terms and to participate in the rights offering along with other stakeholders."

Last night, the bank issued a notice that a vote of the subordinated bondholders would be held on July 7.

The vote is to decide on whether to force losses on bondholders who reject the bank's bond-buyback offer.

The success of that offer depends on getting a majority of the lenders to back the plan because it includes voting on changes to the terms of their bonds.

According to the 'Wall Street Journal', the funds working to block the plan include Appaloosa Management, Marathon Asset Management, QVT Financial and Varde Partners.

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