DUBLIN: Bank of Ireland will raise between ¤500 and ¤600m of equity as early as next week as part of a key refinancing of ¤1.8bn of state preference shares, a source familiar with the deal said yesterday.
The 15 percent state-owned bank faces a March 2014 deadline to refinance the shares before a clause under its state bailout kicks in, increasing the cost of buying them back by 25 percent, or ¤450m.
It will raise the equity through a placement, rather than a rights issue, to retire around a third of the preference shares with the balance made up from the sale of a debt instrument to private investors at a profit to the state, the source said.
A spokeswoman for Bank of Ireland declined to comment on the placement and said the lender was considering a range of options for dealing with the preference shares.
The deal is unlikely to happen before the Thanksgiving holiday this week due to a large amount of US investor interest and until Irish banks get the results of a balance sheet assessment carried out by the country’s central bank.
The banks will get the results of the assessment this weekend and Bank of Ireland will likely give the market an update on the outcome when it announces the transaction.
A successful refinancing of the preference shares would be a big milestone for the bank, the sector and for the government ahead of its exit from an ¤85bn EU/IMF state bailout next month.
Bank of Ireland became the only domestically owned lender to escape full state control after a group of North American investors led by Wilbur Ross and Prem Watsa bought a 35 percent stake just months after Ireland signed up to an EU/IMF bailout three years ago.
Reuters
