The Board of Directors of Bank of Cyprus has decided to proceed with the issue of convertible bonds amounting to EUR 566.2 mln at 6% for the first two years and with a conversion price of EUR 10.50 per share from September 2010 until March 2013 as part of its efforts to further strengthen its capital. The offer is open to existing shareholders.
The Group’s strong capital base was noted as indicated by the Group’s Capital Adequacy ratio (per Basel II requirements) which stood at 12,7% as at 31 December 2007of which 8,7% represented Core Tier 1 capital.
The Board took the decision having taken into account:
• The Group’s three year strategic plan 2008-2010 as announced on 27 February 2008, which targets an annual average growth rate of 28% of the loan portfolio,
• the growth prospects of the Group in the new markets where it is expanding (the operations in Russia and in Romania have already started generating profits for the Group, while the final approval for the completion of the acquisition of AvtoZaZBank is expected shortly from the Ukrainian Authorities),
• the prospect of expediting the penetration of the Group in selected markets via acquisitions, particularly in the Russian market where a number of options are already being examined,
• the maturity/possible redemption of existing debt securities and subordinated bonds totaling EUR500 mln within 2008,
• the current conditions in international markets regarding the raising of Tier 2 Capital,
Existing shareholders
The issue of convertible bond up to EUR566,2 mln will be offered to the existing shareholders, and will be referred to as “Convertible Bonds 2013/2018”.
The terms of the Convertible Bonds 2013/2018 issue include, among others, the following:
Issuer: Bank of Cyprus Public Company Limited
Loan Type: Subordinated Convertible Bonds
Issue Price: At par in values of EUR1 or multiples thereof
Issue Size: Up to EUR566.223.083
Offer and Allotment: Convertible bonds will be offered to all registered shareholders in the ratio of EUR1 Convertible Bond for every share held as at Record Date, with a minimum of EUR105.
This issue will not be offered to any shareholders in any country in which according to the laws of such country, such an offer is illegal or constitutes breach of any applicable law, rule or regulation (e.g. United States, Canada, Australia, South Africa, Japan).
Record Date: The Record Date will be determined after the approval of the Listing Particulars relating to the Convertible Bond issue pursuant to the relevant legislation.
Interest: Convertible Bonds will bear a fixed interest rate of 6,00% for the first two interest periods (that is until 30 June 2009) and floating interest rate thereafter, which will be set at the beginning of each six-monthly period and will apply to the specific interest period.
For the period commencing 30 June 2009 until 30 June 2013 the floating interest rate will be equal to the 6-month Euribor in force at the beginning of each interest period plus 1,00%.
In the event that the Convertible Bonds are not redeemed, then for the period 1 July 2013 to 30 September 2018 the floating interest rate will be equal to the 6-month Euribor in force at the beginning of each interest period plus 2,00%.
Interest Period and Interest payment date: Interest will be paid semi-annually at the end of each Interest Period. The interest payment dates are set as 30 June and 31 December of each year.
Conversion Period: 15 – 31 March for the years 2011 – 2013 and
15 – 30 September for the years 2010 – 2012.
First Conversion Period 15 – 30 September 2010.
Last Conversion Period 15 – 31 March 2013.
Conversion Price: EUR10,50
Final redemption: 30 June 2018
Repayment Price: At par, i.e. EUR1 per Convertible Bond.
Redemption: The Convertible Bonds may be redeemed at the option of the Bank at their principal amount together with any outstanding Payments on 30th June 2013, or on any Interest Payment Date thereafter, subject to the prior consent of the Central Bank of Cyprus.
Listing on CSE and ATHEX: An application will be filed for the listing of the Convertible Bonds on the Cyprus Stock Exchange and the Athens Exchange.
Distribution of unsubscribed amount: In the event of any unsubscribed Convertible Bonds by the existing shareholders the Board of Directors will distribute the unsubscribed Convertible Bonds at its discretion. For this purpose, a bookbuilding and/or application submission by interested investors (shareholders and non-shareholders) will be followed in parallel with the subscription period for the Convertible Bonds by the eligible shareholders. The net proceeds, if any, (sale price less par value of Bonds less expenses), will be distributed to the shareholders who have not subscribed for the convertible bonds in proportion to the number of unsubscribed rights.
The capital that will be raised from the issue will be used to strengthen the Group’s capital adequacy which, together with the projected increased undistributed profits as per the three year plan of the Group, can be invested for the increased growth of the Group’s operations, organically as well as via acquisitions.
The Cyprus Investment and Securities Corporation Ltd (CISCO) are the lead managers of the issue.
