herald

Friday 15 December 2017

Banking: Anglo creditors under pressure

ANGLO Irish Bank bondholders have formed a block against attempts to force a €2bn (£1.74bn) debt exchange on creditors.

Earlier this month, the bank offered to exchange €1.6bn of subordinated debt for new bonds at 20 cents on the euro to generate capital.

However, the group of noteholders, who hold about €690m of lower Tier 2 debt, plan to vote against the offer.

The group said that the amount of bonds they hold is enough to block moves by the bank to force bondholders to accept a tender offer of that issue.

The ad hoc group of investors, represented by law firm Brown Rudnick and investment bank Houlihan Lokey, emailed a statement that said that they do not plan to participate in the tender.

The group said that Anglo Irish's proposal was inconsistent with principles of fair and equal treatment of creditors.

"This is unprecedented and provides for unequal treatment of the minority. We sincerely wish to meet with Anglo Irish to discuss a fair and consensual resolution", said Louise Verrill, partner at Brown Rudnick, in the statement.

Experts said that if more than 75pc of bondholders approved the offer by participating, the company might force dissenting bondholders to sell their bonds back to the bank for just one cent for every €1,000 of the bonds' face value.

The Government has already warned that it will consider introducing legislation to force bondholders to share the burden.

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