By Angela McDaniels
Tacoma, Wash., March 5 - Commerzbank AG will issue 360,509,967 new shares in exchange for €965 million of hybrid capital instruments, subordinated debt securities and other capital instruments, according to a bank news release.
Intermediary Goldman Sachs International acquired the securities from qualified investors outside the United States. It will receive the new shares from Commerzbank and transfer them to the holders once the capital increase is registered.
The exchange offer began Feb. 23 and ended at 8 a.m. ET on March 2.
The following securities were covered by the offer:
• €1 billion of noncumulative trust preferred securities issued by Commerzbank Capital Funding Trust I with a priority level of 1;
• £800 million of noncumulative trust preferreds issued by Commerzbank Capital Funding Trust II with a priority level of 1;
• €750 million of dated upper tier 2 securities issued by UT2 Funding plc with a priority level of 2;
• €1 billion of tier 1 capital securities issued by HT1 Funding GmbH with a priority level of 3;
• €600 million of noncumulative trust preferreds issued by Eurohypo Capital Funding Trust I with a priority level of 4;
• €1.25 billion of subordinated lower tier 2 fixed-to-floating notes due 2016 issued by Commerzbank with a priority level of 5; and
• €750 million of subordinated lower tier 2 fixed-to-floating notes due 2017 issued by Commerzbank with a priority level of 5.
The amounts noted above are the securities' original issue sizes. Their outstanding amounts, as well as the offer results, are noted in the table below.
Holders will receive a number of shares equal to the exchange ratio, which is the theoretical purchase price divided by the exchange share price. The theoretical purchase price for the trust preferreds issued by Commerzbank Capital Funding Trust II was converted into euros using the March 2 exchange rate.
The exchange price, €1.9128, is the average of the daily volume-weighted average price of Commerzbank's ordinary no-par value bearer shares on each of the trading days from Feb. 24 through March 2.
Accrued interest will only be paid on the lower tier 2 notes.
The exchange offers are part of Commerzbank's capital management and will improve its regulatory capital base and reduce future interest expense. The bank expects the transaction to strengthen its core tier 1 capital through 2017 by about €1.2 billion after taxes.
The dealer managers were Citigroup Global Markets Limited. (+44 20 7986 8969 or liabilitymanagement.europe@citi.com), Commerzbank Aktiengesellschaft (+49 69 136 59920 or liability.management@commerzbank.com) and HSBC Bank plc (+44 20 7991 5110 or liability.management@hsbcib.com). The exchange agent was Lucid Issuer Services Ltd. (contact Yves Theis/Paul Kamminga at +44 20 7704 0880 or commerzbank@lucid-is.com).
Commerzbank is based in Frankfurt.
Commerzbank exchange offer
| Securities | Amount accepted | Theoretical price | Exchange ratio
|
| €189.55 million trust preferreds | €41.5 million | €31,500 | 16,468
|
| £115.6 million trust preferreds | £22.5 million | £30,500 | 19,148
|
| €750 million upper tier 2 securities | €87.72 million | €825 | 431
|
| €1 billion tier 1 capital securities | €584,115,000 | €710 | 371
|
| €306,425,000 trust preferreds | €187,838,000 | €690 | 360
|
| €502.15 million lower tier 2 notes | €9.7 million | €41,000 | 21,434
|
| €272.85 million lower tier 2 notes | €26.85 million | €42,500 | 22,218
|
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