How will the AMK and the privatization of Attica Bank be done

By Leonidas Stergiou

The announcement with the decisions of the board of directors of Attica Bank on how to increase the share capital and the choice of preferred investor confirms the reports of Capital.gr about a difficult equation, where the solution may include more than one investor and the capital increase takes place in two phases.

The management of Attica Bank declared him a preferred private investor, without naming him. However, she describes him. The preferred private investor is “one of the investors who had made relevant offers in the preparatory stage for the increase of the Bank’s share capital.” According to information, this investor is Ellington, which already has a partnership with Attica Bank However, the news is rather the information that this preferred investor will not appear alone in the share capital increase, but through TMEDE, which already owns 14% of the Bank. in the share register or only Ellington or both together will occur later and we will probably know this at the beginning of December.The same sources state that TMEDE and Ellington have already signed a relevant agreement.

ΤΜΕΔΕ-Ellington

However, according to the official announcement, the existing shareholders have the right to preference to the increase, ie those who had shares on the specific day that will be announced later (record date). Given that the existing and even private investor with 14% is TMEDE, the most likely scenario is to take part in the share capital increase at least up to its percentage, paying about 35-40 million euros. In this way, due to the joint venture with Ellington, it is possible, on the one hand, for the existing shareholder to participate and, on the other hand, for a new private investor to take part, but with limited risk.

The private investor will be able to increase his percentage either through the AMK process, by buying rights, but also in the future. In addition, as the announcement notes, the board of directors of Attica Bank “decided to continue, with the assistance of the financial advisers of the Bank, AXIA Ventures Group Ltd and EUROXX Securities SA, the discussions with him ( s.s. the preferred private investor) in order to investigate his participation in the Increase and in the further capital increase of the Bank ”.

Two crucial details

The above proposal has two interesting points:

First, discussions are ongoing with the preferred investor, for example Ellington, to investigate its involvement in AMK. So if the information of the TMEDE-Ellington consortium is valid, the question is how this scheme will work and will appear in AMK. That is, if, for example, only TMEDE appears or then Ellington.

Secondly, his participation in the further capital increase of the bank is being investigated. This point leaves open the possibility of a new movement for capital increase, where only the preferred investor can take part or increase his percentage directly or indirectly.

However, if there is a second phase, it is not excluded that one of the interested investors, who wants more time in order to analyze and evaluate the bank, to enter the share capital. The information states that the Bain-Flowers scheme set many conditions and more analysis and valuation of risks, such as securitizations, while the interest of the Indian investor, who is active in the banking sector and in fact in Europe, remains warm. One way is to take a small position now by buying rights, another to show up a second time. This, however, is part of the market scenario for how one or more individuals can make decisions.

Rights convertible into shares

The fact is that the AMK procedure provides for the listing of shares convertible into shares. This is a crucial detail that, in addition to the procedural, solves two technical and legal issues that may have complicated the process. Acquisition of shares through rights (convertible) avoids the case of a mandatory public offering for all the shares of an listed company when an investor acquires a strategic percentage, ie more than 33%. For the HFSF, which acquired 68% of the rights convertible into shares, due to the deferred taxation, the non-obligation for public offering was clarified with an amendment that was recently passed in Parliament. Also, the acquisition of shares through rights is not considered, according to Commission sources, state aid. This could possibly arise in the event that the HFSF or EFKA increased their share due to the non-participation of the private investor TMEDE or the scheme with TMEDE or another private investor.

As far as the HFSF is concerned, the information that is confirmed is that it will participate in the share capital increase, without, however, having yet opened its papers the percentage it will have after the AMK. Estimates converge that the HFSF rate will be reduced from the current 68%.

The terms of AMK

The rest of the data that is confirmed by the official announcement, without involving scenarios and interpretations are the following:

1. The amount of the share capital increase was decided at the upper amount, ie EUR 240 million. The information states that this was the request of the supervisory authorities and they are satisfied with that.

2. 1,200,000,000 new common shares will be issued for this increase.

3. The offering price of the new shares will be as much as the nominal value, ie 0.20 euros.

4. Fractions of the new shares will not be issued.

5. The new shares will be entitled to a dividend.

6. The deadline for the exercise of the pre-emptive rights of the existing shareholders may not be less than 14 days.

7. The cut-off date of the pre-emptive right, the record date of the beneficiaries (record date), the end date of the pre-emptive rights trading period and the end date of the exercise of the pre-emptive rights will be set at the next meeting of the Board of Directors.

8. Those who have a pre-emptive right in AMK will be entitled to acquire new shares with a ratio of 49.5265161872259 new for each old share of the Bank.

9. In case the increase is not fully covered, the share capital will increase up to the amount of coverage.

10. All registered shareholders will have a pre-emptive right to the Increase on the record date, if they retain these rights at the time of their exercise, but also those who acquire pre-emptive rights during their trading period on the Athens Stock Exchange.

11. In case after the timely exercise or amortization of the pre-emptive rights there are unallocated New Shares, the unallocated shares will be available at the Offering Price, ie at 0.20 euros, at the discretion of the Board of Directors of the Bank.

According to estimates, taking into account the approvals and the 14 days of trading of the rights, the AMK is expected to have expired after about 4 to 5 weeks, ie at the beginning of December. Then we will know the new percentages of the basic shares.