URGENT-Co-op Group to cede control of bank to bondholders-sources
LONDON Oct 21 (Reuters) - The Co-operative Group will hand control of the Co-operative Bank to bondholders under new plans to plug a 1.5 billion pound ($2.4 billion) capital shortfall, two sources with knowledge of the plan told Reuters.
In a statement on Monday, Co-op Group said it expected many elements of an original plan set out in June to recapitalise the bank would be materially different under new proposals.
"The plan continues to evolve through the process of consultation and negotiation with bondholders," it said.
Under the original proposals, bondholders would have seen their debt wiped out and replaced with new bonds and shares in the bank which would have been floated later in the year. The Co-op Group, a customer-owned foods-to-funeral conglomerate, would have retained a majority stake and control of the bank.
However, the Co-op's plan met resistance from a group of bondholders, led by Moelis Group, who submitted an alternative plan giving them majority ownership of the bank.
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