Corp Group gets approval to sell, transfer Itau subscription rights

By Sarah Lizee

Olympia, Wash., Oct. 21 – Corp Group Banking SA secured court approval to sell its unencumbered subscription rights for shares of Itau Corpbanca, and transfer the encumbered subscription rights to secured creditors, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As of Oct. 8, the total market value of the debtors’ subscription rights was equivalent to about $8 million.

The subscription rights expire on Nov. 2. If not exercised by then, they become worthless.

The debtors own about 27.2% of the common shares of Itau, and received a corresponding percentage of the subscription rights, the majority of which are encumbered by liens of the debtors’ pre-petition secured creditors.

The company said that because it owns such a substantial stake in Itau, exercising all of their subscription rights would cost the debtors the equivalent of about $275 million, which far exceeds the debtors’ current cash holdings.

Because the debtors own a large percentage of the outstanding subscription rights, they believe that an uncontrolled sale of all of their subscription rights into the market could result in a sale price at a discount to the current market price.

To minimize this discount and maximize the value realized by their estates, the debtors have determined to return the encumbered subscription rights to the applicable secured creditors, and to sell the unencumbered subscription rights into the market with the assistance of a broker.

The Santiago, Chile-based bank filed bankruptcy on June 25 under Chapter 11 case number 21-10969.

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