Novo Banco starts tender offer, proposals for €300 million of notes

Chicago, July 9 – Novo Banco SA started a tender offer on Friday for up to €300 million of notes with a solicitation memorandum, according to a document.

With the tender offers, the company is seeking approval of an extraordinary resolution that would allow for modifications to the terms and conditions to allow the issuer to redeem all of the securities remaining following completion of the offer.

Securities

Novo Banco is offering to purchase notes from the following securities, listed with their early purchase prices, which are 1% higher than the late purchase price for the first four series and 1.5% higher for all the other series – the late purchase price is also the mandatory redemption amount:

• €64,201,000 outstanding of the €150 million series 3 fixed-rate notes due January 2043 (ISIN: XS0869315241) for an early purchase price of 99.5;

• €131,226,000 outstanding of €150 million series 4 fixed-rate notes due January 2043 (ISIN: XS0877741479) for an early purchase price of 99.5;

• €96,919,000 outstanding of €150 million series 3 fixed-rate notes due February 2043 (ISIN: XS0888530911) for an early purchase price of 99.5;

• €70,009,000 outstanding of €150 million series 6 fixed-rate notes due March 2043 (ISIN: XS0897950878) for an early purchase price of 99.5;

• €8,895,000 nominal amount outstanding, €1,836,539 amortized amount outstanding, of €300 million series 57 zero-coupon notes due July 2044 (ISIN: XS0439764191) for an early purchase price of 36, notes that were originally issued by NB Finance Ltd. which replaced BES Finance Ltd. as original issuer;

• €63,.09 million nominal amount outstanding, €11,804,798 amortized amount outstanding, of €400 million series 20 zero-coupon notes due April 2046 (ISIN: XS1058257905) for an early purchase price of 32.65;

• €274,356,000 nominal amount outstanding, €44,947,671 amortized amount outstanding, of €400 million of series 18 zero-coupon notes due April 2048 (ISIN: XS1053939978) for an early purchase price of 30.55;

• €212,652,000 nominal amount outstanding, €33,686,163 amortized amount outstanding, of €300 million series 7 zero-coupon notes due October 2048 (ISIN: XS0972653132) for an early purchase price of 29.5;

• €258,567,000 nominal amount outstanding, €39,918,389 amortized amount outstanding, of €400 million series 12 zero-coupon notes due February 2049 (ISIN: XS1034421419) for an early purchase price of 29.45;

• €257,202,000 nominal amount outstanding, €34,630,144 amortized amount outstanding, of €400 million series 13 zero-coupon notes due February 2051 (ISIN: XS1038896426) for an early purchase price of 26.8;

• €112,485,000 nominal amount outstanding, €15,119,940 amortized amount outstanding, of the series 14 zero-coupon notes due March 2051 (ISIN: XS1042343308) for an early purchase price of 26.7; and

• €297,335,000 nominal amount outstanding, €37,120,000 amortized amount outstanding, of €400 million series 19 zero-coupon notes due April 2052 (ISIN: XS1055501974) for an early purchase price of 25.5.

Interest will also be paid.

Security holders who deliver tender instructions will be deemed to have voted in favor of the extraordinary resolution.

Security holders can also deliver voting-only instructions without tendering their notes.

To be eligible for the full purchase price, tendering security holders can not attend the relevant meeting or have any representation at the meeting.

Tenders may be scaled in relation to the maximum purchase amount.

Rationale

The bank is working toward an entity-specific minimum requirement for own funds and eligible liabilities.

The bank received notice on June 16 that it will be required to comply with the minimum requirement on a consolidated bases at the level of 14.64% of total risk exposure amount by Jan. 1, 2022 and 22.78% of total risk exposure amount from Jan. 1, 2026 onwards.

While the securities were all issued under Portuguese law, banks are strongly encouraged to continue their efforts to introduce recognition clauses to existing contracts or replace instruments without such clauses to achieve further progress towards resolvability.

The bank intends to replace the securities with new notes to comply with the requirements for 2021 and optimize its cost and funding structure.

New notes

The bank intends to offer new euro-denominated senior preferred notes.

Tendering securityholders may be given preference in the allocation of the new notes.

Securityholders who deliver voting-only instructions will not be given any preference.

Details

The deadline for tender instructions or voting-only instructions in favor of the extraordinary resolution is 11 a.m. ET on July 16.

The early settlement announcement date is July 19.

The early settlement date is July 26.

The offers and proposals will expire at 11 a.m. ET on July 28.

The early voting fee will be paid only if the extraordinary resolution is passed and implemented.

The meetings to pass the extraordinary resolutions will be held via teleconference on Aug. 2. The deadline for obtaining a form of proxy is 4:30 a.m. ET on July 29.

Settlement for the offer is Aug. 4.

If there is a mandatory redemption, that is expected to take place on Aug. 6.

Dealer managers for the offer are Credit Suisse Securities Sociedad de Valores SA (+44 0 20 7883 8763, liability.management@credit-suisse.com), Deutsche Bank AG (+44 0 20 7545 8011), J.P. Morgan AG (+44 0 20 7134 2468, liability_management_EMEA@jpmorgan.com) and Nomura Financial Products Europe GmbH (+44 0 20 7103 2454, liability.management@nomura.com).

The tender agent is Lucid Issuer Services Ltd. (+44 20 7704 0880, novobanco@lucid-is.com, https://deals.lucid-is.com/novobanco).

Novo Banco is a bank based in Lisbon.

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