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The Bank of Cyprus board decided after a marathon 12-hour meeting to offer 4.17 bln new shares in a private placement to institutional investors with the aim of raising about €1 bln in fresh capital and boosting its liquidity ratio by more than four percentage points.
After agreeing on July 15 to seek new investors, the bank announced the successful private placement of 4,166,666,667 new ordinary shares at 24c each, offered to new investors and existing shareholders.
It said the placing “was comfortably oversubscribed” and allocated to a broad range of institutional investors from Europe, North America and Russia, including a number of international investors introduced by WL Ross & Co LLC and the European Bank for Reconstruction and Development (EBRD).
The bank added that the closing of the placing is subject to a “clawback” of up to 20% in favour of existing shareholders, subject to an extraordinary general meeting next month.
The offer to existing shareholders will be available for 15 days starting July 31 for a minimum offer of €100,000.
The new shares will be unlisted at the time of issue, but the bank said it “intends to proceed with the listing for the entire class of its ordinary shares on the Cyprus Stock Exchange and the Athens Exchange as soon as reasonably practicable … before the end of the year.”
The bank said it will also offer up to €100 mln of new ordinary to all existing shareholders, thus allowing current stakeholders to minimise the losses from a dilution of their shareholding.
HSBC and Credit Suisse acted as lead placing agents, with Deutsche Bank and VTB Capital acting as co-lead placing agents. The bank’s subsidiary CISCO was the local placing agent.
The bank said that after the capital raising, its Common Equity Tier 1 ratio is expected to rise from 10.6% by more than four percentage points to 15.1%, thus providing a safety cushion prior to the Europe-wide stress tests in October.
“The fact that high calibre institutional investors were interested and participated successfully in this exercise is a testament to their confidence in the bank and also in the economy of Cyprus,” said Chairman Christis Hassapis.
CEO John Hourican added “we are delighted with the quality of investors and the broad investor base including international investors introduced by WL Ross, the EBRD as well as other institutional investors which we believe have a long-term view. We are pleased to welcome them as new shareholders and we appreciate the continued support of our existing shareholders.”
“In co-operation with the senior management of the Bank of Cyprus, we were pleased to assist with the introduction of international investors who are committed to buying about 40% of this placement,” added Wilbur L. Ross, Founder and Chairman of WL Ross & Co. LLC.
The Financial Mirror had earlier reported that US-based hedge funds were keen to grab more than half of the offered capital increase, expressing an interest to subscribe to 54% of the capital increase and thus a majority control of the board, while another hedge fund has submitted a bid of 30 cents a share, that in itself would cover the entire new capital and again seek board control.
