Action of bondholders ‘entirely unfounded’

A HIGH Court challenge by holders of a portion of €2.6 billion worth of Allied Irish Bank (AIB) subordinated bonds, to prevent the Irish Government “burning” 80% of their holdings, is “entirely unfounded” according to Finance Minister Michael Noonan.

Abadi & Co and Aurelius Capital Management have filed challenges in the High Court after the securing of a court order on April 14 by the Government changing the terms and conditions of subordinated securities in AIB. It is understood that Aurelius holds €100 million in subordinated AIB bonds.

The court gave the Government the power to force massive losses on AIB subordinated bondholders. The challenge is scheduled to open in the High Court on May 9. A spokesman in the Finance Department said yesterday: “Two challenges from subordinated bondholders have been received. The minister considers that these challenges are entirely unfounded. They will be dealt with by the High Court in due course.