Soc Gen offers loans for BOC rights

Societe Generale Cyprus is offering investor loans to thousands of Bank of Cyprus shareholders to help them exercise their rights into shares during the December 13-19 conversion period.

The BOC rights (BCRI), which made their debut on Tuesday ended at 16.2 cents in a range of 15.3-16.4 at a time when the fully paid shares ended at CYP 2.40.

BOC has issued a total of 467,413,395 rights that may be exchanged into shares at a ratio of 1 share for every 6 rights at the exercise price of CYP 1.40. During Tuesday trading, 5.04 mln BCRI changed hands in brisk trade.

Soc Gen is offering up to three years financing for people interested in borrowing money to exercise the rights at a spread of 2.5% above Base rate, or 6.75% on a reducing balance calculation of interest method, plus CYP 25 annual administrative charges.

There are no minimum or maximum amounts for the loan, but Soc Gen is asking for two BOC shares as collateral against the loan, the repayment of which may be made between 1-3 years or earlier without any penalties.

There is also a clause stipulating that in the event that BOC shares drop below 20% of current prices, then Soc Gen has the option to ask for additional margin cover.

Although the scheme has been launched in cooperation with Egnatia Financial Services, the loan is open to all BOC shareholders irrespective of whether or not they have a CSE Trading or broker account.

While there has been a rush to open CSE Trading accounts, brokers estimate that up to 50% of the 53,000 or so BOC shareholders may not have a CSE Trading account, which means they will not be able to trade their rights until December 5 when trading is allowed, leading many to decide to convert into shares during the exercise period of December 13-19.