Bank of Cyprus in 400 mln eur rights issue

 * 600 mln in MCN for greater capital buffer *

Bank of Cyprus has decided to strengthen its capital base via a rights issue of up to 396 mln euros (US$ 546 mln) and a voluntary exchange of convertible securities. The move follows increased regulatory capital requirements and the impact of further writedowns on its Greek government bond portfolio.
Under the terms of the rights issue, the bank will issue one right per one existing share. Every three rights that will be exercised will be converted to one new share at a price of one euro per share, the bank said.
In late August the bank posted a first-half loss of 112 mln euros, hurt by writedowns of 281 mln resulting from its planned participation in a voluntary swap of Greek government bonds under a July 21 deal.
The bank held 1.07 bln euros eligible for the Greek bond swap plan at the end of June. Under the new rescue deal agreed by EU leaders on October 26, private sector bondholders would take a 50% haircut on their Greek bond holdings.
There will also be a voluntary exchange of capital enhanced securities (CECS) through an issue of up to 600 mln euros of mandatory convertible notes (MCN), offered exclusively to existing CECS holders.
The MCN will not bear interest and will mature eight calendar days following their date of issue. On maturity, the bank will redeem each MCN with the issue of one fully paid new share.