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VBAG and Investkredit Announce Repurchase of Hybrid Capital

Published: May 22, 2012; 16:37 · (Vindobona)

Austrian Volksbanken-Aktiengesellschaft (VBAG) and Investkredit Bank AG (IK) announce offers to repurchase hybrid capital, like other banks did before.

VBAG and Investkredit Announce Repurchase of Hybrid Capital / Picture: © Wikipedia / MrPanyGoff

This liability management measure is part of the restructuring agreement with the Republic of Austria and was approved by the European Commission and the Austrian Financial Markets Authority. The aim is to enhance VBAG´s capital position by increasing core capital.

In total, VBAG and IK have issued hybrid capital securities via special purpose vehicles in an amount of € 300m (VBAG: € 250m, IK: € 50m). The tender offer commences today and will expire on 11 June 2012. The offered purchase price for the securities issued by VBAG is € 390 per € 1,000 nominal value and for securities issued by IK it is € 392.5 per € 1,000 nominal value. In addition, investors will receive  € 10 per € 1,000 nominal of VBAG securities in return for consenting to proposed amendments to the terms and conditions of the hybrid securities. In the case of IK hybrid securities, investors will receive  € 7.5 per 1,000 nominal for participating in the voting process.

The purchase prices offered includes a premium of close to 10 percentage points on current market prices and are subject to restrictions by the European Competition Authority. Investment banks BNP Paribas and Citigroup Global Markets Limited have been mandated with the arrangement of the tender offers.