Anglo Irish Creditor Group Plans to Decline Subordinated Debt-Swap Offer

A group of Anglo Irish Bank Corp.’s creditors will decline to participate in a debt swap proposed by the nationalized lender, said Houlihan Lokey, an investment bank that is representing the noteholders.

Anglo Irish this month offered to exchange 1.6 billion euros ($2.2 billion) of subordinated debt for new bonds at 20 cents on the euro to generate capital. The group of noteholders, which hold about 690 million euros of lower Tier 2 debt, plan to vote against the offer, Houlihan Lokey said in an e-mailed statement late yesterday.

“Anglo Irish is attempting to strong-arm noteholders to vote in favor of the exchange offer by threatening to eliminate minority dissenting noteholders’ rights to repayment of monies loaned by them,” the statement said. The group includes pension-plan money managers, insurers, retail investors and secondary purchasers, and Brown Rudnick LLP is providing it with legal advice, it said.

Ireland faces a bill of more than 50 billion euros, about 22 percent of 2009 gross domestic product, to prop up lenders and wants to ensure the burden is shared with subordinated bondholders. The Oct. 21 exchange offer came after Finance Minister Brian Lenihan vowed to “address the issue” of junior bondholders taking a loss on investments in nationalized banks.

Billy Murphy, an outside spokesman for Dublin-based Anglo Irish, couldn’t immediately be reached outside office hours.

According to Anglo Irish’s proposal, the lender would offer bondholders that don’t take up the debt swap 1 cent per 1,000- euro face amount to redeem their floating-rate lower Tier 2 notes due 2014, 2016 and 2017. The new securities would be due 2011 and guaranteed by the government.

Quelle: Bloomberg