Hellenic Bank announces that it has entered into an agreement for the sale of a non-performing loan portfolio (“MEX”) and for the sale of APS Debt Servicing Cyprus Ltd (“APS Debt Servicer”).
The package agreement includes (a) the SEC securities of approximately € 1.32 billion (the “Starlight Portfolio”) and (b) the sale of the Bank’s APS Debt Servicer platform to Oxalis Holding SARL (“Oxalis”), which is managed and advised by Pacific Investment Management Company LLC (“PIMCO”).
The Transaction consists of:
– The transfer of the Starlight Portfolio to a Cyprus Credit Acquisition Company (the “KEEP”) and the subsequent sale of 100% of the shares of KEEP to Oxalis,
– The securitization of the Starlight Portfolio and the issuance of high, medium and low repayment priority bonds,
Acquisition by Oxalis of 95% of the Medium (Mezzanine) and Low (Junior) Bonds of the repayment priority of the securitization of the Starlight Portfolio,
Acquisition by Oxalis of 33.3% of the Senior Bonds of the repayment priority of the securitization of the Starlight Portfolio,
– The Bank will hold 66.7% of High Senior Bonds and 5% of Mezzanine and Junior Bonds,
– Sale of 100% of the shares of APS Debt Servicer to Themis Portfolio Management Ltd (“Themis”), a Cypriot debt and property recovery and management company owned by PIMCO, and
– Signing of a long-term exclusive agreement for the management of the Bank’s remaining portfolio as well as future non-performing loans that may arise.
Main Trading Points:
A. Significant risk reduction with the adjusted GPA index (excluding GPAs covered by the PPP) falling to around 3.4%.
– After the completion of the Transaction, the risk in the Bank’s balance sheet will be significantly reduced, reducing the LNG by € 0.72 billion, with the result that the remaining LNG portfolio amounts to approximately € 0.653 billion, of which € 0.433 billion is covered by Asset Protection Program (“PPP”),
– The LDC index adjusted for the Transaction will decrease from 21.0% in December 2021 to about 11.6% and to about 4.4%, excluding the LDCs covered by the PPP. Taking into account the acquisition of a portfolio of serviced loans by RCB Bank Limited, the adjusted GPA ratio (excluding GPAs covered by the PPP) decreases to approximately 3.4% 3, and
– The frontloaded reduction of the risk in the Bank’s balance sheet will allow the normalization of the future cost-benefit ratio of loan impairment losses, with the Bank benefiting from the interest income from the withholding of 66.7% of the Senior Bonds. .
B. Positive effect of height of about 15m.b. for the Class 1 Common Equity Index (CET 1)
– The Transaction has an overall positive capital effect on the CET 1 index of approximately 15m.b. based on the financial figures for December 2020 upon completion, taking into account the de-portfolio consolidation and profits from the sale of APS Debt Servicer,
– The Transaction values the value of the Starlight Portfolio at an indirect price of € 320 million, which corresponds to a Price / MLA of 41% and compares favorably with other similar transactions,
– The Transaction also values 100% of the Corporate Value of APS Debt Servicer, together with the ten-year contract for the management and servicing of the Bank’s shares at € 37 million, which includes € 5 million through a variable price mechanism that depends on the achievement of specific objectives,
– Oxalis acquires 95% of the Medium (Mezzanine) and Low (Junior) Priority Bonds for a price of € 86 million,
Oxalis acquires 33.3% of its Senior Bonds, and
– The Bank will keep 5% of the Medium (Low) (Junior) Repayment Priority Bonds in order to comply with the risk weighting rules.
C. Long-term cooperation for the management of the Bank’s remaining MEX portfolio
– Through the Transaction, the Bank enters into an exclusive, long-term agreement (the “SLA”) for the management of the remaining portfolio of MEX, as well as MEX that may arise in the future,
The initial duration of the SLA is 10 years, and
– The Bank expects to benefit in relation to the achievement of its leverage targets from its cooperation with PIMCO given the long experience and track record of PIMCO in MEX management in Europe.
The Transaction is expected to be completed by the end of 2022 and is subject to all approvals and consents from supervisory authorities as well as competition authorities. The Transaction is based on the principle of equal distances (arm’s length) and is the result of a two-phase competitive process with significant investment interest. It is noted that Poppy SARL, which holds 17.3% of the Bank’s share capital, is owned by investment funds managed by PIMCO.
Commenting on the transaction, Oliver Gatzke, Chief Executive Officer, said: “This transformative transaction is a crucial step in tackling the Bank’s NPLs. , 4% The transaction was achieved with a positive effect on the funds while the Bank’s participation in the financing of High Priority Bonds will provide it with interest income for the coming years.We have also successfully agreed the sale of APS Debt Servicer. With the sale of the MEX portfolio, we focus on our strategic goals for the development and transformation of the Bank for the benefit of its customers, employees and shareholders ”.
Barclays Bank PLC, acting through its Investment Bank (“Barclays”), has acted as the Bank ‘s Chief Financial Officers and the Exclusive Securitization Intermediaries. PricewaterhouseCoopers acted as Technical Support Financial Advisers. Allen & Overy LLP and Clifford Chance LLP provided advice on international legal issues and Georgiadis & Pelidis DEPE on Cypriot legal issues.
Source: Capital
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