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Financials

UPDATE 4-Heta creditors say have formed blocking minority on buyback

* Creditors say they have more than one third of bonds

* Austrian squeeze-out provision requires two-thirds majority

* Carinthia still preparing offer, says it must be considered (Adds comment by adviser, paragraphs 6-7, detail, background)

VIENNA, Dec 16 (Reuters) - Creditors of Austrian “bad bank” Heta Asset Resolution have agreed to form an alliance that could block any offer to buy back their bonds for less than the full value guaranteed by the province of Carinthia, they said on Wednesday.

Carinthia guaranteed the debt of Hypo Alpe Adria, the now defunct lender from which Heta was formed. It is now preparing an offer to buy back Heta bonds at a discount to the 11 billion euros ($12 billion) in guarantees it made for them.

Several creditors have said they will not sell at a discount, but a recent Austrian law states that if creditors representing two thirds of the 11 billion accept the offer it is binding on all of them.

Saying they control more than 5 billion euros in Heta bonds in total, creditors said in a statement on Wednesday they “have reached agreement not to accept any transaction ... which would result in a recovery below par”.

Carinthia’s finance chief Gaby Schaunig dismissed the remarks as nothing new.

“The bond buyback offer will be within the legal framework and have to be considered by the creditors in all due seriousness and intensity,” she said in a statement, adding Carinthia’s planned contribution of 1.2 billion euros was what was legally allowed and financially possible.

An adviser to one of the groups involved in the blocking minority, however, said the alliance was legally binding, meaning any offer at a discount to the 11 billion would fail.

“It’s contractual. Everyone’s locked up,” he said, referring to the creditors that had signed the agreement. “They’re bound and they’ve agreed only to sell at par.”

The creditors that are part of the agreement include the members of the so-called Ad Hoc group, which includes Germany’s Commerzbank and has said it represents 2.5 billion euros in claims, and the Par Investor Group.

The Par Investor Group counts Helvetia Insurance, Dexia Kommunalbank Deutschland and the Deposit Protection Fund of the German Banking Association among its members, the statement said.

Deutsche Pfandbriefbank was also a party to the two groups’ agreement, it added.

Carinthia’s offer is due to be funded by loans from the federal government. A spokeswoman for Austria’s Finance Ministry said the parties involved would have to wait until a firm proposal was made to see where creditors stood.

“No offer has yet been made by Carinthia to the creditors,” she said. “Naturally, one can only judge an offer once it is on the table.” (Additional reporting by Shadia Nasralla; Editing by Keith Weir and Mark Potter)

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