LONDON, Dec 20 (IFR) - An offer by DEPFA Bank to buy back some of its hybrid debt at a deep discount to par, while giving investors a sweetener to amend the terms and conditions, was turned down by bondholders, which will stop the issuer from redeeming the securities.
The bailed-out German lender was seeking to amend the terms and conditions on three hybrid Tier 1 securities totalling EUR1.2bn so that it could retire them at a deep discount, instead of calling them at par at the next call dates.
The bank had structured its exercise differently from how the Irish banks did in 2010/2011 when they included exit consent measures designed to coerce non-consenting bondholders into taking part in their distressed buy-backs.
It was offering a 1% sweetener for bondholders who agreed to a change in the terms and conditions by December 18 ahead of a December 20 formal meeting deadline, and would have paid them 30% of face value.
Under the terms of the liability management exercise, if DEPFA got at least a third of bondholders to approve, by a simple majority in each of the bonds, it would have been able to redeem the rest at 29% of par.
However, in an announcement today, the issuer said that while the resolutions were duly passed in respect of one bond, DEPFA Funding III LP, they were not for the other two deals in question (DEPFA Funding II LP and DEPFA Funding IV LP).
“Thus under the terms of the Consent Solicitation the terms and conditions of all three series of Securities will not be amended and the Securities will not be redeemed,” the issuer said in a statement.
”The Consent Solicitation was intended to allow for the opportunity to redeem the Securities whilst ensuring proper burden-sharing as required by the European Commission. DEPFA Bank followed a voluntary and market-based approach reflecting the distressed nature of the Securities.