Tuesday 21 November 2017

Holders of €227m AIB bonds snub buyback

Banks

Donal O'Donovan

Donal O'Donovan

AIB said the bank's offer to buy back its €2.3bn of subordinated bonds was not accepted by the holders of more than £200m (€227m) of the debt.

The bank's offer was backed by 86pc of the €2.3bn of debt being targeted. In a statement, AIB said that holders of two sets of sterling bonds rejected the offer to sell their debt at a fraction of face value.

Last night, a spokeswoman for the bank said the two bonds would now be the subject of a court-ordered Subordinated Liability Order (SLO).

It means the Government has a free hand to impose changes on the terms of the bonds. As a result of the SLO, interest will only have to be paid to bondholders at the discretion of the bank, and the repayment dates will be changed from 2019 and 2025 to 2035.

Failed

A third set of bonds that hedge fund Aurelius Capital holds a share of also failed to pass the vote to accept the buyback deal. The hedge fund is challenging the Government's right to impose the losses and was expected to block the offer.

A 75pc majority of each of 18 separate slices of bonds was needed to carry the offer. The bank failed to get that, but the SLO effectively means bondholders have no real power to block the offers anyway.

Meanwhile, shareholders trying to block the nationalisation of Irish Life and Permanent have hired SLK solicitors. A spokesman for the group of shareholders said the solicitors have written to the Government saying a plan to take control of the bank in exchange for a €2.2bn capital injection was unconstitutional.

The letter states that Irish and European property rights and human rights laws could be breached if the takeover goes ahead as shareholders fear.

Irish Independent

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