Allied Irish Banks delivers early results of tenders for liabilities

By Jennifer Chiou

New York, June 14 - Allied Irish Banks plc announced the results to date of its tender offers covering several series of notes, reserve capital instruments and preferred securities.

Overall, the provisional tenders amount to more than 86% of the affected securities.

Thus far, the bank has recorded tenders for:

• All £145,000 of its subordinated callable fixed/floating-rate notes due 2030;

• $38,359,000 of its $39,316,000 of outstanding dated callable step-up subordinated notes due 2015;

• £125,000 of its £1,261,000 of outstanding subordinated callable fixed/floating-rate notes due 2025;

• €49.93 million of its €75,215,000 of outstanding callable subordinated step-up floating-rate notes due 2017;

• £41,103,000 of its £215,963,000 of outstanding 12½% subordinated notes due June 2019;

• €588,498,000 of its €628,448,000 of outstanding 12½% subordinated notes due June 2019;

• $93.51 million of its $108,104,999 of outstanding 10¾% subordinated notes due 2017;

• £384,294,000 of its £385,344,000 of outstanding 11½% subordinated notes due 2022;

• €53,515,000 of its €53,793,000 of outstanding perpetual subordinated callable step-up notes;

• £58,558,000 of its £58,608,000 of outstanding perpetual callable step-up subordinated notes;

• €229,494,000 of its €240,435,000 of outstanding 7½% step-up callable perpetual reserve capital instruments;

• $98.98 million of its $100 million of outstanding subordinated primary capital perpetual floating-rate notes;

• €187.39 million of AIB UK I LP's €191,398,000 of outstanding fixed-rate/floating-rate guaranteed non-voting non-cumulative perpetual preferred securities;

• €94,624,000 of AIB UK 2 LP's €95,041,000 of outstanding fixed-rate/floating-rate guaranteed non-voting non-cumulative perpetual preferreds; and

• £36,181,000 of AIB UK 3 LP's £36,728,000 of outstanding fixed-rate/floating-rate guaranteed non-voting non-cumulative perpetual preferreds.

The bank said in a release that it expects to generate €1.6 billion of core tier 1 capital following completion of the tender offers.

The offers for the 2015 euro notes, the 2017 euro notes and the 2023 sterling notes (together, the "delayed-settlement notes") will expire at 5 p.m. ET on July 20. The offers for the remaining securities ended at midnight ET on June 13.

Settlement is anticipated for June 17 for the other securities, and the bank plans to announce the amount of each series of delayed-settlement notes validly tendered under the bank offer on July 21.

As reported, the bank is offering 25% of par for the callable fixed/floating-rate notes due 2030; callable step-up subordinated notes due 2015; subordinated callable step-up floating-rate notes due 2015; subordinated callable fixed/floating-rate notes due 2025; callable subordinated step-up floating-rate notes due 2017; callable dated subordinated fixed-to-floating-rate notes due July 2023; and the two series of 12½% subordinated notes due June 2019.

Allied Irish is offering 22.5% of par for its two series of 10¾% subordinated notes due 2017 and 11½% subordinated notes due 2022.

Finally, the bank is offering 10% of par for the perpetual subordinated callable step-up notes; perpetual callable step-up subordinated notes; subordinated primary capital perpetual floating-rate notes; 7½% step-up callable perpetual reserve capital instruments; AIB UK I's perpetual preferreds; AIB UK 2's non-cumulative perpetual preferreds; and AIB UK 3's non-cumulative perpetual preferreds.

No amount will be paid for any accrued interest or arrears of interest on the securities.

Consent solicitation

As already reported, concurrent consent solicitations are being held for the securities. AIB GP No. 1 Ltd. is soliciting consents to amend the terms of the three series of perpetual preferreds, and Allied Irish Banks is soliciting consents for the remaining securities.

Holders are being asked to vote in favor of an extraordinary resolution that will give the issuers the option to redeem or purchase all, but not a portion of, any securities that remain outstanding after the tender offers at a price equal to €0.01 per €1,000, £0.01 per £1,000 or $0.01 per $1,000.

The extraordinary resolution would also amend the terms of the three series of preferreds to remove any restriction on any repurchase or redemption by the bank of junior or parity securities in the event that the bank elects not to pay any scheduled distributions on the relevant preferreds (each a "dividend stopper").

Holders who tender are deemed to have consented to the extraordinary resolution.

Allied Irish said that it intends to announce whether it accepts notes or preferreds in the offers and if the amendments have passed following meetings on June 16.

Holder dispute

In May, Aurelius Capital Management, LP alleged that the bank's offers prove that the Irish Ministry of Finance has "egregiously discriminated" against U.S. investors.

Aurelius is the investment manager for three funds that own bonds covered by the offers. The funds have appealed the subordinated liabilities order issued last month at the request of the Irish Ministry of Finance. Under the order, the bank had to amend some of the terms of the bonds.

Aurelius previously said the Irish Ministry of Finance discriminated against U.S. investors by excluding them from the bank's prior tender offer at a higher price and then imposing the "punitive" subordinated liabilities order.

As noted, Allied Irish Banks is offering 10% to 25% of par in the current offers. It offered 30% of par for 11 series of notes in a tender offer in January.

The subordinated liabilities order is part of the Central Bank of Ireland's Prudential Capital Assessment Review, under which several Irish banks have been ordered to deleverage and increase capital.

As previously reported, the amendments extended the maturity dates of some securities to 2035 and made interest payments on them optional. Others were amended to remove any restriction on the payment of any distribution or dividend on, or any repurchase or redemption of, any other specified junior or parity securities.

The Irish High Court was to hear the noteholder challenges to the amendments on June 2.

As reported, no offer is conditioned on a minimum principal amount of securities being tendered or the completion of any other offer. However, the purchase by the bank of any preferreds or perpetual reserve capital instruments is conditioned on the removal of the dividend stoppers for all series of preferreds.

The dealer manager for the tender offers is J.P. Morgan Securities Ltd. (contact Ryan O'Grady at 44 0 20 7779 2468 or ryan.ogrady@jpmorgan.com, or contact Sebastien Bamsey at 44 0 20 7777 1333 or sebastien.m.bamsey@jpmorgan.com). The tender and tabulation agent is Lucid Issuer Services Ltd. (contact Yves Theis or David Shilson at 44 20 7704 0880 or aib@lucid-is.com).

Allied Irish Banks is a Dublin-based financial services company.

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