Bank of Cyprus has decided to exercise its option to redeem in whole the Capital Securities Series A at par. The redemption date is 20th February 2008. The Capital Securities Series A are of a total amount of C£65 mn (111 mn euro) and are listed on the Cyprus Stock Exchange.
In addition, the Bank has decided to proceed with one or more issues of new capital securities (hybrid Tier 1 Capital) of a total value of C£100 mn, with an option to increase the amount to C£150 mn.
During the period 5 - 20 December 2007, the Bank will proceed with the issue of new capital securities, which it intends to name "Capital Securities issue 12/2007". The intended issue will be based on an Information Memorandum which will be addressed to professional investors (as defined in Law 114(Ι)/2005), and to persons who will invest at least 50.000 euro each (or the equivalent amount in Cyprus Pounds), who may be interested in purchasing capital securities of Bank of Cyprus. The public offer of Capital Securities issue 12/2007 will be made in accordance with the provisions of articles 4(3)(a) and (c) of the Public Offer and Prospectus Law of 2005 of the Republic of Cyprus.
The terms of the Capital Securities issue 12/2007 ('the Capital Securities') include the following:
- The Capital Securities will be issued in Cyprus Pounds at par in values of C£100 or multiples of C£100. The Capital Securities will be converted into Euro on 1/1/2008 using the fixed conversion rate of 1 Euro = Cyprus Pound 0,585274.
- The minimum amount of investment is C£30.000.
- The Capital Securities will pay interest every three months and will bear a fixed interest rate of 6,00% for the first two interest periods (that is for the first six months) and floating interest rate thereafter, which will be set at the beginning of each three-monthly period and will apply to the specific interest period.
The floating interest rate will be equal to the 3-month Euribor in force at the beginning of each interest period plus 1,25%. On the date of this announcement, the 3-month Euribor stood at 4,75%.
- The rights and claims of the holders of Capital Securities have priority over the shareholders of the Bank.
The rights and claims of the holders of Capital Securities rank pari passu with the rights and claims of the holders of Capital Securities Series A and Capital Securities Series B.
The Capital Securities constitute direct, unsecured and subordinated securities of the Bank.
The rights and claims of the holders of Capital Securities are subordinated to the claims of the creditors of the Bank, who are:
- depositors or other unsubordinated creditors of the Bank and
- subordinated creditors, except those creditors whose claims rank pari passu with the claims of the holders of the Capital Securities.
No payment in relation to the Capital Securities will be payable unless the Bank is solvent and will continue to be solvent immediately following such a payment.
- The Capital Securities have no maturity date. However, the Capital Securities may be redeemed in whole at the option of the Bank, at their principal amount together with any accrued interest, five years after their issue date or on any other interest payment date thereafter, subject to the prior consent of the Central Bank of Cyprus and provided that they will be substituted with tier 1 capital unless the Central Bank of Cyprus is satisfied that the Bank has sufficient capital adequacy.
- If the Bank, at its sole discretion, determines prior to any interest payment date that it is in non-compliance with the required capital adequacy as set by the Central Bank of Cyprus or the payment of interest will result in non-compliance with the required capital adequacy, then the Bank may elect to defer such interest payment, subject to the restrictions described below. Such deferred interest payment, shall be satisfied only on the date upon which the Capital Securities are redeemed. No interest will accrue on a deferred interest payment.
If the Bank defers an interest payment for any reason then no dividend payment or any other payment will be permitted on the ordinary share capital or other Tier 1 securities of the Bank until the Bank next makes an interest payment on the Capital Securities.
- The investors will always receive interest payments made in respect of the Capital Securities in cash. However, if the Bank defers an interest payment, then any such deferred interest payment must be satisfied by the Bank through the issue of ordinary shares.
- The Bank intends to apply to the relevant authorities for the listing of the Capital Securities on the Cyprus Stock Exchange.
Bank of Cyprus has mandated The Cyprus Investments and Securities Corporation Ltd (CISCO) as Manager of the Capital Securities issue.
Contact details in relation to the issue of Capital Securities issue 12/2007:
- The Cyprus Investments and Securities Corporation Ltd (CISCO) Tel. +357 22 881837
- Private Banking division of Bank of Cyprus Tel. +357 22 881881
- Treasury of Bank of Cyprus Tel. +357 22 842262