Banco de Galicia completes debt exchange offer

New York, April 28 - Banco de Galicia y Buenos Aires SA said it completed its offer to exchange its 9% notes due 2003 and step-up floating-rate notes due 2002.

The offer expired at 3 p.m. ET on April 27 after a number of extensions.

By the expiry date, holders had tendered $1.3276 billion of the company's existing debt including $313.0 million of the $350 million of old notes. The response represents 98.6% of the principal amount of old notes and bank debt subject to the restructuring.

Settlement is expected on May 18.

The Buenos Aires, Argentina, bank announced on Dec. 23 that was offering to exchange the 9% notes and floating-rate notes for cash, Bonos del Gobierno Nacional due Aug. 3, 2012 issued by the Republic of Argentina (Boden 2012) or new securities.

As the first step, the bank is offering to exchange the notes for an equal principal amount of units. The units will be made up of dollar-denominated notes due 2014 and dollar-denominated notes due 2019 at the rate of 75% of the 2014 notes and 25% of the 2019 notes.

Noteholders will also have the option to participate in the second stage in which they can trade their units for either:

* A combination of the bank's dollar-denominated notes due 2010 and restricted preferred shares of Grupo Financiero Galicia SA, the bank's parent company, that will be mandatorily convertible into restricted class B shares of Grupo Galicia on the first anniversary of their issuance or, if earlier, on a change in control of Grupo Galicia; or

* Notes due 2014; or

* Cash; or

* Boden 2012s.

In each case except for the 2014 notes, the value of the securities or cash received will be less than the face amount of the existing notes.

Holders will be able to retender any units not accepted in the second stage due to pro ration and pick a different option.

Banco de Galicia will pay accrued interest on the existing notes in cash and additional units.

The bank is also requesting authorizations to file an Acuerdo Preventivo Extrajudicial which, if approved by an Argentine bankruptcy court, would compel holders of the existing notes and Banco de Galicia's bank, multilateral agency and trade finance creditors who did not participate in the exchange or the concurrent bank debt restructuring to receive units or similar instruments in exchange for their debt.

Banco de Galicia noted it is in default on the notes and most of its foreign debt.

The bank debt restructuring and the exchange offer are subject to 95% of the principal amount of the existing notes and bank debt being tendered.

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