April 23, 2020 / 2:37 PM / a month ago

UPDATE 1-Bulgaria's Fibank cuts price, increases number of shares it plans to issue

(Adds bank’s reasons for price change)

SOFIA, April 23 (Reuters) - Bulgaria’s First Investment Bank (Fibank) has cut the price and almost doubled the number of shares it plans to issue to raise 200 million levs ($110 million) to help it cover a capital shortfall found by ECB stress tests last year, the prospectus showed.

Fibank’s capital increase is the last box Bulgaria has to tick before it can get the nod to enter the European Union’s banking union and the “waiting room” to join the euro. Sofia wants to apply to join both at the end of April.

Bulgaria’s fifth-largest lender has given up plans to sell 25 million new shares at 8 levs per share and instead opted to issue 40 million new shares at 5 levs per share.

The new plan received a green light from the country’s financial regulator on Thursday.

The bank said in a statement it decided to cut the issue price to better reflect the current market price and attract more investors.

Fibank will consider the issue a success if as few as 4 million shares are sold. Shareholders will have the right to buy one new share for every 2.75 held, the prospectus said.

The trading of rights and subscription of new shares is expected to start around June 12 and the capital increase be registered by the end of July, the document showed. Trading in new shares should commence in the middle of August.

The stakes of Bulgarian businessmen Tseko Minev and Ivailo Mutafchiev, each owning 42.5% of the lender, would be diluted after the issue, but the two would remain majority shareholders, the document showed.

The remaining 15% is floated on the Sofia bourse.

Shares of the bank, which has total assets of 10.7 billion levs, jumped by 23.15% to 2.66 levs by 1410 GMT.

The new price of 5 levs per share still represents a premium to the current market price, with traders saying there is speculation that the state might buy some of the issue, particularly given its potential broader financial significance for the country.

Fibank needs to bolster its capital after a comprehensive assessment of six Bulgarian lenders by the European Central Bank (ECB) last year found it had a capital shortfall of 263 million euros ($286 million).

Finance Minister Vladislav Goranov has said the lender has managed to cover about 70% of the estimated gap and was working seriously to secure the remaining part. ($1 = 1.8149 levs) (Reporting by Tsvetelia Tsolova; Editing by Steve Orlofsky, Kirsten Donovan)

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