Pensioners win their BoI burdensharing battle

Posted by Tracy Alloway on Jun 28 08:30.

Simply amazing.

After a very vocal campaign highlighting the unfairness of Bank of Ireland’s proposed exchange offer for subordinated debt — which included £75m worth of so-called Pibs that the Irish bank inhereited from Bristol & West held that are mostly held by pensioners– it looks like a victory has been declared.

The BoI has very suddenly backed down on its Pibs exchange.

The bank’s statement on Tuesday, with our highlights:

TERMINATION OF EXCHANGE OFFER AND CONSENT SOLICITATION FOR THE £75,000,000 13.375 PER CENT. UNSECURED PERPETUAL SUBORDINATED BONDS OF THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

(IN SUBSTITUTION FOR BRISTOL & WEST PLC)

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND ANNOUNCES THE TERMINATION OF THE EXCHANGE OFFER AND CONSENT SOLICITATION IN RESPECT OF ITS £75,000,000 13.375 PER CENT. UNSECURED PERPETUAL SUBORDINATED BONDS (ISIN: GB0000510312). THE TERMS OF THE OFFERS IN RELATION TO ALL THE OTHER SERIES OF SECURITIES LISTED IN THE CONSENT AND EXCHANGE OFFER MEMORANDUM REMAIN AS DESCRIBED IN THE CONSENT AND EXCHANGE OFFER MEMORANDUM.

Background

On 8 June 2011 The Governor and Company of the Bank of Ireland (the “Bank”) announced an invitation to holders of the £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds (ISIN: GB0000510312) to offer to exchange their 13.375 per cent. Unsecured Perpetual Subordinated Bonds for cash or allotment instruments (the “Exchange Offers”). In conjunction with the Exchange Offers, the holders of the £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds were invited to consent to certain modifications to the terms of their 13.375 per cent. Unsecured Perpetual Subordinated Bonds (the “Consent Solicitations” and, together with the Exchange Offers, the “Offers”).

The full terms and conditions of the Offers are set out in the Consent and Exchange Offer Memorandum dated 8 June 2011, which has been available to eligible holders from Lucid Issuer Services Limited at the details set out below.

The £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds are issued in registered form. The register of Bondholders maintained by Capita Registrars Limited on behalf of the Bank shows that a significant number of the holders of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds still hold their 13.375 per cent. Unsecured Perpetual Subordinated Bonds in certificated form outside the Clearing Systems. At the close of business on 24 June 2011 holders of approximately 12 per cent of the £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds had submitted valid Exchange Instructions pursuant to the Exchange Offers. This contrasts with an overall participation level to date of approximately 74 per cent of eligible holders across all other Series of Existing Securities which are the subject of the offers relating to those Existing Securities. The Bank has previously recognised that holders holding their 13.375 per cent Unsecured Perpetual Subordinated Bonds outside the Clearing Systems may find it difficult to participate efficiently in the Exchange Offers in the manner specified in the Consent and Exchange Offer Memorandum. The Bank understands that some holders of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds have continued to encounter procedural difficulties in participating in the current Exchange Offers as launched on 8 June 2011.

Termination of Offers in respect of the £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds

The Bank has decided and hereby announces that the Exchange Offers in respect of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds are terminated with immediate effect.

Any 13.375 per cent. Unsecured Perpetual Subordinated Bonds already tendered in the Exchange Offers will be returned to the holders by the Registrar.

Exchange Instructions relating to the 13.375 per cent. Unsecured Perpetual Subordinated Bonds received after the date hereof will be rejected and the relevant 13.375 per cent. Unsecured Perpetual Subordinated Bonds will be returned to the holders by the Registrar.

As a result of the termination of the Exchange Offer in respect of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds, the Bank hereby announces that the Consent Solicitation in respect of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds is also withdrawn.

Since the notice convening the Meeting to consider and vote on the Consent Solicitation is irrevocable, the Meeting will take place in accordance with such notice. However, the Bank hereby amends the terms of the Offers in respect of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds such that submissions of a valid Exchange Instruction before the date hereof will not also instruct a proxy to attend the relevant meeting and vote in respect of the relevant Extraordinary Resolution. The Bank hereby confirms that it will take no action in relation to implementing the Extraordinary Resolution in respect of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds.

Future Offer

In order to give holders of the £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds who had been considering offering their 13.375 per cent Unsecured Perpetual Subordinated Bonds for exchange another opportunity to offer their 13.375 per cent Unsecured Perpetual Subordinated Bonds for exchange, the Bank currently intends to instigate a new offer to holders of the £75,000,000 13.375 per cent. Unsecured Perpetual Subordinated Bonds at a future date. In so doing, the Bank will seek to address the unique difficulties that have been highlighted to the Bank to date with regard to participation in the terminated Offers by the holders of the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds.

The termination of the Offers relating to the £75,000,000 13.375 per cent Unsecured Perpetual Subordinated Bonds made in this announcement does not purport to affect any statement of the Irish Minister for Finance as referred to in the Consent and Exchange Memorandum concerning the Credit Institutions (Stabilisation) Act 2010 of Ireland and burden-sharing by holders of subordinated debt.

Again, simply amazing.

Related links:
FSA says ‘no’ on Bank of Ireland – FT Alphaville
UK pensioners 1 Irish bank 0 – FT Alphaville
Brussels setback for small BoI investors – FT
Former farmer risks bankruptcy by taking Bank of Ireland to court – Telegraph

This entry was posted by Tracy Alloway on Tuesday, June 28th, 2011 at 8:30 and is filed under Capital markets. Tagged with , , , , .

Advertisements
Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: