April 16, 2013 / 11:06 AM / 4 years ago

UPDATE 1-Greek Alpha Bank shareholders clear recap plan

(Adds chairman, CFO quotes, reverse split, background)

* Shareholders approve 4.57 bln euro share cap plan

* Reverse share split to range from 2-for-1 to 10-for-1

* Board to decide price of share offering at later date

By George Georgiopoulos

ATHENS, April 16 (Reuters) - Shareholders of Greece’s third-largest lender Alpha Bank gave a green light on Tuesday to a 4.57 billion euro ($6 billion) recapitalisation plan to improve the bank’s solvency and keep it privately run.

Alpha became Greece’s first big lender to get shareholder approval to go ahead with the capital boost. The country’s top four banks, including Alpha, need 27.5 billion euros in fresh funds to restore their solvency after incurring losses from a sovereign debt writedown and impaired loans.

The recapitalisation, financed out of Greece’s EU/IMF rescue loans, is expected to help its so-called systemic banks regain interbank access and fund the economy out of its six-year tailspin.

“The capital increase is key for the bank to emerge stronger and remain private,” Alpha Chairman Yannis Costopoulos told shareholders at a repeat meeting on Tuesday.

Under the recapitalisation rules laid down by Greece’s creditors, at least 10 percent of banks’ new common equity must be raised from the private sector. If not, they will fall under the full control of a state bank support fund - the Hellenic Financial Stability Fund (HFSF).

Alpha’s capital need has been set by the central bank at 4.571 billion euros.

Its plan includes a rights offering of up to 457.1 million euros and new common shares to raise up to 92.9 million euros on which existing shareholders will waive their rights. These shares will be privately placed with institutional investors.

Together, Alpha’s common equity issues amount to 12 percent of its capital need.

Tuesday’s meeting was attended by shareholders representing about 29 percent of the bank’s voting shares, exceeding a required quorum of 20 percent.

Shareholders also empowered management to decide on a reverse split to reduce the number of new shares the bank will issue under the plan. The reverse split may range from 2-for-1 to 10-for 1, and will be decided by the board at a later date.

If Alpha succeeds in raising the minimum 10 percent of the capital need from the market, the remaining 4.113 billion euros will be supplied by the HFSF in exchange for new shares with restricted voting rights.

Under the terms of the recapitalisation plan, the new shares will be priced at half of the average price over the 50 days prior to their issue.

“If it (issue date) was today, it would mean a price of about 0.48 euros a share,” Alpha Chief Financial Officer Vassilis Psaltis told shareholders.

As an incentive, private investors will get one warrant for each new common share for which they subscribe, enabling them to buy shares taken up by the HFSF fund.

The warrants can be exercised semi-annually for a span of four-and-a-half years after their issue date. The number of Alpha shares each warrant can buy from the HFSF fund will range from 7.31 to 9, depending on the take-up of the private sector. (Editing by Mark Heinrich)

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