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Nordea seeks holder approval to amend multiple notes for merger plans
By Susanna Moon
Chicago, March 4 Nordea Bank Finland plc said it is soliciting noteholder consents to modify the terms of a number of series of notes in connection with its proposed merger with Nordea Bank AB.
Nordea Bank AB plans to simplify its legal structure by merging its three wholly owned banking subsidiaries, Nordea Bank Denmark A/S, Nordea Bank Finland plc and Nordea Bank Norge ASA, into Nordea Bank AB, as three separate cross border mergers, according to a company press release.
In Finland, the relevant provisions for a cross-border merger have been implemented into the Companies Act, and as such the issuer will be dissolved and will cease to exist, the company noted.
Before the cross-border merger proposal, the issuer said it is doing a partial demerger so that its mortgage bank business, together with its existing covered bonds and the related collateral, will be transferred to a company to be incorporated at the time of the demerger and entering into the deed poll and NBF guarantee in order to preserve the existing covered bonds status as covered bonds under the Finnish Covered Bonds Act.
The demerger and the consent solicitation will also align the structure of the Nordea groups Finnish covered bond program with its covered bond programs in Denmark, Norway and Sweden, the company noted.
To address the planned cross-border merger, the issuer said it has announced the demerger of the issuer before the cross-border merger of the issuer and has signed the demerger plan on Feb. 4. The issuer has filed a notice to execute the demerger on Feb. 8.
The demerger will be implemented on July 1.
Covered bondholders are being asked to approve the proposal in advance of the implementation of the demerger.
The covered bonds are expected to continue to be recognized as eligible collateral for monetary policy operations of the central banking system for the euro and intra-day credit operations by the Eurosystem, the release noted.
However, the issuer said it plans to go through with the demerger and the subsequent cross-border merger regardless of the outcome of the consent solicitations, because this would not constitute a default under the terms of the covered bonds or otherwise require the consent of covered bondholders.
In the demerger, all assets and liabilities of the issuer that are allocated to the new issuer in the demerger plan, are by operation of Finnish law transferred to the new issuer upon implementation of the demerger.
The issuer said it is making the consent solicitation to receive confirmation from covered bondholders that they support the proposal and the proposed amendments and thereby to remove any unforeseen legal uncertainties for existing stakeholders including the covered bondholders.
The company noted that there is no inter-conditionality between the extraordinary resolutions for any series of covered bonds.
More details
The purpose of each consent solicitation is to modify the each note series to provide that the bondholders:
Acknowledge and accept the terms of a deed poll and a secondary guarantee, which are being given to covered bondholders in connection with the partial demerger of the issuer; and
Agree to release and waive all rights, claims or entitlements against the issuer.
Under the deed poll, the new issuer will agree to assume all of the obligations of the issuer as primary obligor for the covered bonds.
The issuer will enter into the NBF guarantee on the date of implementation of the demerger in favor of the covered bondholders, whereby it will agree to meet any claims of covered bondholders for principal and interest under the bonds to the extent that these are not paid by the new issuer and are not met out of the assets of the cover pool held by the new issuer.
The purpose of the guarantee is to provide covered bondholders with secondary rights of recourse against the current issuer to acknowledge the dual rights of recourse that they enjoy under the terms of the covered bonds. If the cross-border merger goes through, the guarantee will become an obligation of NBAB.
The solicitation is being made to bondholders who are outside the United States and not a U.S. person under Regulation S and otherwise a person to whom the consent solicitation can be lawfully made.
The early participation fee will be 0.1% for holders who give consent instruction in favor of the proposal by 5 p.m. CET on March 18, the early instruction deadline.
Bondholders who submit consent instructions after the early deadline will not receive the early participation fee.
The solicitation will end at 10 a.m. CET on March 30.
The bondholder meetings will be held in London on April 1.
The last date for issuers creditors to object to the demerger plan is May 23.
The proposed demerger date is July 1.
The consent solicitation requires that the proposal pass and the quorum met, as well as the needed majority of votes cast, at the bondholder meeting.
Bonds covered
The bond issues covered by the solicitation are as follows:
150 million floating-rate covered bonds due July 11, 2016;
10 million floating-rate covered bonds due Aug. 2, 2016;
172.5 million floating-rate covered bonds due Aug. 10, 2016;
50 million floating-rate covered bonds due Aug. 15, 2016;
1.5 billion 2.375% covered bonds due Sept. 2, 2016;
2.25 billion 2.375% covered bonds due July 17, 2017;
$10 million floating-rate covered bonds due Oct. 16, 2017;
35 million floating-rate notes due November 2017;
25 million floating-rate covered bonds due Feb. 27, 2018;
10 million floating-rate covered bonds due March 2018;
100 million floating-rate covered bonds due Aug. 2, 2018;
1.5 billion 1.375% covered bonds due Aug. 28, 2018, with 13 million held by issuer;
50 million floating-rate covered bonds due Sept. 11, 2018;
1.5 billion 1.25% covered bonds due Jan. 14, 2019;
20 million 3.520% covered bonds due Jan. 25, 2019;
1.5 billion 2.25% covered bonds due May 3, 2019;
50 million floating-rate covered bonds due Sept. 27, 2019;
1.25 billion 1.375% covered bonds due Jan. 15, 2020 with 11.5 million held by issuer;
15 million floating-rate covered bonds due February 2020;
1 billion 0.125% covered bonds due June 17, 2020
45 million 0.3% covered bonds due Nov. 23, 2020;
1 billion 4% covered bonds due Feb. 10, 2021;
CHF 150 million 2.375% covered bonds due March 2, 2021;
70 million floating-rate covered bonds due May 28, 2021;
10 million floating-rate covered bonds due Oct. 7, 2021;
10 million floating-rate covered bonds due February 2022;
15 million 2.77% covered bonds due April 11, 2022;
36 million floating-rate covered bonds due April 20, 2022;
1.25 billion 0.625% covered bonds due Oct. 19, 2022;
10 million 1.11% covered bonds due Sept. 22, 2023;
53 million floating-rate covered bonds due February 2024;
1 billion 1% covered bonds due Nov. 5, 2024;
10 million 0.7% covered bonds due Dec. 13, 2024;
1 billion 0.625% covered bonds due March 17, 2027;
15 million 1.442% covered bonds due July 21, 2027;
20 million 1.451% covered bonds due Nov. 11, 2030; and
50 million 1.55% covered bonds due Dec. 18, 2030.
The solicitation agents are Deutsche Bank AG, London Branch (+44 20 7545 8011 or liability.management@db.com), Merrill Lynch International (+44 20 7996 5698 or DG.LM_EMEA@baml.com), Nordea Bank Danmark A/S (+45 3333 1675 or NordeaLiabilityManagement@nordea.com).
The tabulation agent is Lucid Issuer Services Ltd. (Paul Kamminga, +44 20 7704 0880 or nordea@lucid-is.com)
Nordea Bank is a Stockholm-based financial services company.
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