The Bank of Cyprus completed on 20 December 2007 the issue of Capital Securities 12/2007 (the 'Capital Securities'). The total issue amounts to £74mn (euro 126.436.506,66).
The Capital Securities represent Tier 1 Capital for capital adequacy purposes.
The Capital Securities were allocated to professional investors (as defined in Law 114(Ι)/2005), and to persons who invested at least euro50.000 each (or the equivalent amount in Cyprus Pounds).
Bank of Cyprus has mandated The Cyprus Investments and Securities Corporation Ltd (CISCO) as Manager of the Capital Securities issue.
The terms of the Capital Securities include the following:
* The Capital Securities were 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 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%.
* 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.
The proceeds of the issue will strengthen the Bank's capital base.