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UPDATE 1-Portugal's Novo Banco secures bondholder support for buyback
October 4, 2017 / 9:31 AM / 2 months ago

UPDATE 1-Portugal's Novo Banco secures bondholder support for buyback

(Updates with details, comment)

LISBON, Oct 4 (Reuters) - Portugal’s state-rescued Novo Banco said it has secured bondholders’ approval for a discounted debt buyback, a key condition for completing the sale of the lender to U.S. private equity firm Lone Star.

The bank said in a statement it had received orders for the early redemption of 4.743 billion euros ($5.6 bln) of bonds.

“The transaction allows the bank to meet the goal of raising the capital ratio (Core Tier 1) and equivalent gains, including savings on interest payments, by more than 500 million euros,” Novo Banco said in a statement.

The deadline for the transaction was Oct. 2 and brings the drawn out sale of Novo Banco within reach.

The sale to Lone Star was agreed in March and the Portuguese government had said it hoped to conclude the operation by November. Under the deal, Lone Star will buy 75 percent of Novo Banco and inject 1 billion euros into the bank.

“The closure of the sale to Novo Banco should take place shortly after formal approval by the European Commission,” Novo Banco said.

Novo Banco was carved out of Portugal’s biggest ever bank collapse in 2014 after a 4.9-billion-euro rescue of Banco Espirito Santo.

“This is good for the Portuguese financial system because it allows the conclusion of the sale operation,” said Andre Rodrigues, a bank analyst at Caixa Banco Investimento. “I see no reason why the Commission shouldn’t approve it (the sale).”

Acceptance of the bond buyback fell slightly short of a target to gain approval from 75 percent of bondholders but it met the main objective of 500 million euros of savings.

Failure to complete the bond buyback could have made it necessary to ask bondholders to put new equity into the bank or wind it down. ($1 = 0.8507 euros) (Reporting By Axel Bugge and Sergio Goncalves; Editing by Susan Fenton)

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