NICOSIA, Cyprus, July 29, 2014 /PRNewswire/ --
NOT FOR DISTRIBUTION IN THE UNITED
STATES, CANADA,
AUSTRALIA OR JAPAN
This announcement shall not constitute an offer to sell or a
solicitation of an offer to purchase any securities in the United States, and shall not constitute an
offer, solicitation or sale in any state or jurisdiction in which
such an offer, solicitation or sale would be unlawful. The
securities are not being registered under the U.S. Securities Act
of 1933, as amended, and may not be offered or sold in the United States except pursuant to an
applicable exemption from such registration. No public offering of
securities will be made in the United
States.
- Successful EUR1 billion capital increase through private placement of new shares (Phase 1)
- Common Equity Tier 1 ratio (CRD IV/CRR - fully loaded basis) expected to be 15.1%,
significantly ahead of European peers
- Proceeding with phase 2 with offer to existing shareholders of up to 20% of shares
offered in phase 1 by way of an open offer
Group Profile
Founded in 1899, Bank of Cyprus Group is the leading banking
and financial services group in Cyprus. The Group provides a wide
range of financial products and services which include retail and
commercial banking, finance, factoring, investment banking,
brokerage, fund management, private banking, life and general
insurance. The Group operates through a total of 300 branches, of
which 130 operate in Cyprus, 164
in Russia, 1 in Romania, 4 in the United Kingdom and 1 in the Channel Islands. Bank of Cyprus also has 5 representative offices in
Russia, Ukraine, China and South
Africa. The Bank of Cyprus Group employs 6,898 staff
worldwide. At 31 March 2014, the
Group's Total Assets amounted to €29.4 bn and Total Equity was €2.7
bn.
Further to the announcement by the Bank of Cyprus Public Company
Ltd (the "Bank" or the "Group") on 15 July
2014 of the intention to explore investor interest for a
potential share capital increase via a phased
non-pre-emptive issue of ordinary shares (the "Capital Raising"),
the Bank announces the successful private placement (the "Placing")
of 4,166,666,667 new ordinary shares at a price per share of €0.24
(the "Placing Price") with total gross proceeds of €1 billion. The
Placing completes phase 1 of the Capital Raising, which was open to
qualified investors (as defined in the EU Prospectus Directive and
in Article 2 of the Cyprus Public Offer and Prospectus Law), and
similarly qualified institutional investors in other jurisdictions,
both new investors and existing shareholders. The Placing was
comfortably oversubscribed confirming the strong interest from
institutional investors for the Bank. The shares were allocated to
a broad range of institutional investors from Europe, North
America and Russia,
including a number of international investors introduced by WL Ross
& Co LLC and the European Bank for Reconstruction and
Development ("EBRD"). The closing of the Placing is subject to a
clawback of up to 20% in favour of the Bank of Cyprus' existing shareholders under phase 2 of
the Capital Raising and the satisfaction of certain conditions,
including the passing of shareholder resolutions at an
extraordinary general meeting of the Bank's shareholders (the
"EGM") required to approve and implement the Capital Raising.
All material information which was provided to investors in
connection with the Placing will be available on the Bank's website
http://www.bankofcyprus.com (select Investor Relations/Capital
Increase 2014).
The Bank also announces that it is proceeding with phase 2 of
the Capital Raising. Phase 2 will consist of an open offer to
existing shareholders (the "Open Offer") which will provide
existing shareholders with the opportunity to subscribe, over a
period of 15 business days starting from 31
July 2014, for up to 20% in aggregate of the total number of
shares offered to qualified investors in the first phase and at the
same price as the Placing Price. The minimum purchase consideration
per existing shareholder in the Open Offer will be €100,000 (which
is an exemption under the EU Prospectus Directive from the
requirement to produce an approved prospectus) and all existing
shareholders (whether or not qualified investors) are eligible to
participate subject to certain restrictions on offerings to
overseas shareholders. The Bank will publish on its website
http://www.bankofcyprus.com (select Investor Relations/Capital
Increase 2014) a circular to its shareholders in relation to the
Open Offer and the EGM and further details on the Open Offer and
the EGM can be found in this circular.
Allocations to investors in phase 1 will be adjusted to
accommodate the shares subscribed for by existing shareholders in
the Open Offer through the clawback so that the total gross
proceeds raised from phase 1 and the Open Offer will remain at €1
billion. The closing of the Open Offer is subject to the same
conditions as the Placing in phase 1. Assuming these conditions are
satisfied, the Bank's issued ordinary share capital will reach
€892,237,734.50 divided into 8,922,377,345 ordinary shares of
nominal value of €0.10 each upon the closing of the private Placing
and the Open Offer.
The new shares to be issued under the private Placing and the
Open Offer will be unlisted at the time of issue. However, the Bank
intends to proceed with the listing for the entire class of its
ordinary shares on the Cyprus Stock Exchange and the Athens
Exchange as soon as reasonably practicable. Admission of the
ordinary shares to trading on these exchanges is expected to take
place before the end of the year.
In addition, in phase 3 ("the Retail Offer") of the share
capital increase, the Bank expects to offer up to €100 million of
new ordinary shares (in addition to those sold in phases 1 and 2)
for subscription by all existing shareholders (excluding those who
had participated in the Placing unless they were existing
shareholders prior to the Placing) prior to any listing of the
shares on the Cyprus Stock Exchange and the Athens Exchange
(subject to necessary regulatory approvals). Phase 3 will be a
retail offer for which an approved prospectus for the purposes of
the EU Prospectus Directive will be prepared in order to allow for
maximum shareholder participation. The subscription price for the
shares in phase 3 will be the same as in phase 1 and phase 2 of the
Capital Raising.
HSBC and Credit Suisse acted as Lead Placing Agents, with
Deutsche Bank and VTB Capital acting as Co-Lead Placing Agents.
CISCO was the Local Placing Agent.
As at 31 March 2014, the Bank's
Common Equity Tier 1 ratio was 10.6%. The capital increase of €1
billion, combined with deleveraging actions completed after the
first quarter of 2014, are expected to strengthen the Bank's Common
Equity Tier 1 ratio (CRD IV/CRR[1] - transitional basis)
to 15.6% and its Common Equity Tier 1 ratio (CRD IV/CRR - fully
loaded basis) to 15.1%[2].
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1. As from 1 January 2014, the new
Capital Requirements Regulations (CRR) and amended Capital
Requirements Directive IV (CRD IV) became effective.
In addition to strengthening the Bank's capital base, the
Capital Raising provides the following additional strategic
benefits:
- Pro-actively increases the Bank's ability to confidently meet
regulatory tests and withstand potential exogenous shocks;
- Improves stakeholders' confidence in the Bank;
- Expedites the implementation of the Group's Restructuring
Plan;
- Improves funding options, facilitating the Bank's access to
capital markets;
- Provides a path to the Bank's listing of its ordinary shares;
and
- Positions the Bank to stimulate and benefit from the recovery
of the Cypriot economy.
Dr Christis Hassapis, Chairman of
Bank of Cyprus Group commented:
"This successful Placing will significantly strengthen the
Bank's capital position and is an essential step in the
restructuring of the Group.
The strengthened capital position will improve stakeholders'
confidence in the Bank and enhance funding options available to the
Bank. The fact that high calibre institutional investors were
interested and participated successfully in this exercise is a
testament to their confidence in the Bank and also in the economy
of Cyprus. As the leading bank in
Cyprus, the Bank will contribute
to and benefit significantly from improving economic fundamentals
and confidence in its home market."
John Hourican, CEO of Bank of
Cyprus Group, commented:
"The success of the private placing demonstrates the confidence
that international institutional investors have in the Bank's
turnaround and the economic recovery in Cyprus, only a year after the Bank exited
resolution status. We are delighted with the quality of investors
and the broad investor base including international investors
introduced by WL Ross, the EBRD as well as other institutional
investors which we believe have a long-term view. We are pleased to
welcome them as new shareholders and we appreciate the continued
support of our existing shareholders.
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2. After elimination of deferred tax asset in excess of the
threshold amounts (10%/15%) of Common Equity Tier 1 capital.
This significant investment, which is the biggest single foreign
direct investment into Cyprus,
will help to ensure that Bank of Cyprus becomes one of the best capitalised
banks in Europe. It also enables
us to accelerate the implementation of the Bank's Restructuring
Plan.
We remain committed to supporting the Cypriot economic recovery,
serving our customers and delivering value for our shareholders."
Wilbur L. Ross, Founder and
Chairman of WL Ross & Co. LLC, stated:
"In co-operation with the senior management of the Bank of
Cyprus, we were pleased to assist
with the introduction of international investors who are committed
to buying about 40 percent of this placement. Subject to regulatory
approvals, we intend to play an active role in the rejuvenation of
the Bank of Cyprus and are eager
to find additional investment opportunities in Cyprus. This country had been thriving prior
to the European financial crisis and we believe it is well on its
way toward recovery."