Bank of Ireland releases results of exchange offers, consent bids

By Angela McDaniels

Tacoma, Wash., July 8 - The Bank of Ireland announced the results of the exchange offers and consent solicitations for its tier 1 and tier 2 securities, which ended at 5 p.m. ET on July 7.

The bank said it made the offers to certain holders that include, subject to some conditions, U.S. holders who are qualified institutional buyers as defined in Rule 144A of the Securities Act.

Holders were given two options. Those who chose option one will receive euro-denominated allotment instruments issued by the bank plus accrued interest. Those who chose option two will receive a cash payment for their securities, and no payment will be made for accrued interest.

According to a 6-K filing with the Securities and Exchange Commission, holders tendered the following tier 1 securities;

• €149,796,000 of BOI Capital Funding (No. 1) LP's €215,866,000 fixed-rate/variable-rate guaranteed non-voting non-cumulative perpetual preferred securities, including €96,072,000 for option one and €53,724,000 for option two;

• $58,645,000 of BOI Capital Funding (No. 2) LP's $61,271,000 fixed-rate/floating-rate guaranteed non-voting non-cumulative perpetual preferreds, including $55.23 million for option one and $3,415,000 for option two;

• $16,097,000 of BOI Capital Funding (No. 3) LP's $19,797,000 fixed-rate/floating-rate guaranteed non-voting non-cumulative perpetual preferreds, including $13.81 million for option one and $2,287,000 for option two;

• All of BOI Capital Funding (No. 4) LP's £5.07 million fixed-rate/floating-rate guaranteed non-voting non-cumulative perpetual preferreds, including £4.32 million for option one and £750,000 for option two;

• £39,904,000 of Bank of Ireland UK Holdings plc's £40,146,000 6¼% guaranteed callable perpetual preferreds, including £39,432,000 for option one and £472,000 for option two; and

• €124,794,000 of Bank of Ireland UK Holdings' €253,335,000 7.4% guaranteed step-up callable perpetual preferreds, including €108,017,000 for option one and €16,777,000 for option two.

The bank received tenders for the following upper tier 2 securities:

• $75.1 million of Bank of Ireland's $75.14 million undated floating-rate primary capital notes, including $64.71 million for option one and $10.39 million for option two.

Tenders were also received for the following lower tier 2 securities, all issued by the Bank of Ireland:

• C$38,461,000 of its C$89,733,000 of fixed/floating dated subordinated notes due September 2018, including C$38,459,000 for option one and C$2,000 for option two;

• €87.1 million of its €91.1 million callable step-up floating-rate subordinated notes due January 2017, including €87.1 million for option one and none for option two;

• €35.45 million of its €48.1 million callable step-up floating-rate subordinated notes due 2017, including €33.1 million for option one and €2.35 million for option two;

• £57,522,000 of its £57,736,000 callable fixed/floating dated subordinated notes due January 2018, including £57.4 million for option one and £122,000 for option two;

• £25,416,000 of its £27,117,000 of 10¾% subordinated bonds due 2018, including £24,805,000 for option one and £611,000 for option two;

• $180,005,000 of its $184,241,000 callable step-up floating-rate subordinated notes due July 2018, including $179,585,000 for option one and $420,000 for option two;

• €182,356,000 of its €201,487,000 fixed/floating-rate subordinated notes due 2019, including €177,508,000 for option one and €4,848,000 for option two;

• £62.42 million of its £87,147,000 10% subordinated notes due 2020, including £61,983,000 for option one and £437,000 for option two;

• €541,153,000 of its €747,056,000 10% subordinated notes due 2020, including €530.16 million for option one and €10,993,000 for option two; and

• £270,404,000 of its £272,128,000 callable subordinated step-up notes due September 2020, including £267,922,000 for option one and £2,482,000 for option two.

The bank will accept all of the securities tendered. It expects to issue €654,174,605 principal amount of allotment instruments and to pay €10,120,980, $2,474,200, £814,340 and C$400 in cash.

For securities tendered by the early participation deadline, which was 5 p.m. ET on June 22, the exchange rates used to set the amount of allotment instruments were 1.4279 dollars per euro, 0.89233 pounds sterling per euro and 1.388 Canadian dollars per euro.

For securities tendered after the early participation deadline, the exchange rates are 1.4302 dollars per euro, 0.89602 pounds sterling per euro and 1.3711 Canadian dollars per euro.

The allotment instruments will automatically convert into ordinary shares on the conversion date, which is expected to be Aug. 12. The conversion price is €0.1156 per share. The minimum denomination of the allotment instruments is €50,000.

Bondholders who chose the equity option will receive an amount of allotment instruments equal to 20% of par for tier 1 debt securities and 40% of par for tier 2 debt securities. The amount will be 16% of par and 32% of par, respectively, for securities tendered after the early participation deadline.

Those who chose option two will receive a cash purchase price of 10% of par for tier 1 debt securities and 20% of par for tier 2 debt securities. The price will be 8% of par and 16% of par, respectively, for securities tendered after the early participation deadline.

Consent solicitations

The bank also solicited consents to modify the terms of the securities to include an option for the issuer to redeem or purchase all, but not only some, of the securities that remain outstanding following the exchange offers at 0.001% of par.

No consent fee will be paid.

Bondholders voted at separate meetings on July 7. By tendering in the exchange offers, holders agreed to vote in favor of the proposals.

The resolution was passed for most of the securities. The resolution was rejected by the holders of Bank of Ireland UK Holdings' 7.4% tier 1 guaranteed step-up callable perpetual preferreds and by the holders of the following lower tier 2 securities issued by Bank of Ireland: fixed/floating dated subordinated notes due September 2018, callable step-up floating-rate subordinated notes due 2017, pound sterling-denominated 10% subordinated notes due 2020 and euro-denominated 10% subordinated notes due 2020.

Other securities

Also eligible for exchange are the bank's C$138,721,000 of lower tier 2 fixed/floating dated subordinated notes due September 2015. The deadline for these notes has not occurred yet.

As of the early participation deadline, holders had tendered C$33,285,000 of these notes for option one and C$165,000 for option two.

These holders will vote on the extraordinary resolution at a meeting on Aug. 10.

When the offers began, the bank was also offering to exchange the £75 million 13 3/8% perpetual subordinated bonds originally issued by Bristol & West plc. The exchange offer for these securities was terminated on June 28.

The 13 3/8% bonds were issued in registered form, and a significant number of the holders hold their bonds in certificated form outside the clearing systems. On June 14, the bank said this may make it difficult for these holders to participate in the offer by the early participation deadline, and it extended the early deadline for these holders to July 5 so they would not be disadvantaged.

Bank to generate €4.2 billion

As previously reported, the purpose of the exchange offers and consent solicitations is to generate capital. The bank is required to raise €4.2 billion of core tier 1 capital in order to satisfy the regulatory capital requirements announced by the Central Bank of Ireland on March 31.

Other elements of the bank's capital-raising efforts include a rights issue for €1.76 billion to €2.22 billion. The exact size will be €4.35 billion minus the core tier 1 capital generated from the actions taken in regards to the subordinated debt securities.

The bank will also place a €1 billion contingent capital instrument with the government. The five-year tier 2 subordinated instrument will carry a 10% coupon and will be convertible into equity at the higher of the bank's 30-day volume-weighted average share price and €0.05.

The dealer managers for the exchange offers are Credit Suisse Securities (Europe) Ltd. (44 20 7883 8763), Deutsche Bank AG, London Branch (44 20 7545 8011) and UBS Ltd. (44 20 7567 0525, 203 719-4210 or 888 719-4210).

The EC/CS exchange agent, DTC exchange agent and tabulation agent is Lucid Issuer Services Ltd. (44 20 7704 0880), and the CDS exchange agent is Equity Financial Trust co. (416 361-0152).

Bank of Ireland is a Dublin-based retail and commercial bank.

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