Firm may appeal court ruling on AIB buyback

A CAYMAN Islands investment firm representing some junior bondholders in AIB said it may appeal a High Court ruling that limits the effect of its legal challenge to a ministerial order which cleared the way for a more severe debt buyback scheme.

Aurelius Capital Master Ltd, which along with some linked firms is challenging a Subordinated Liabilities Order obtained by the Minister for Finance from the court last April, had argued its challenge prevented the coming into effect of the entire SLO, made by the High Court on April 14.

The SLO allows the minister change terms, conditions and maturity dates on AIB’s subordinated bonds, lift restrictions on buybacks and reduce the value of the bonds so as to encourage bondholders to take up a debt buyback offer with a take-up deadline of June 13. Under the buyback, AIB will impose losses of as much as 90% on subordinated bondholders.

Mr Justice John Cooke yesterday rejected Aurelius’ arguments as to the scope of its challenge and upheld arguments by counsel for the minister the challenge was limited to those parts of the SLO relating to the Aurelius bonds. He ruled the SLO became effective on April 22 for 16 out of 18 categories of securities identified in it. The two categories excluded are those categories in which the Aurelius firms hold their bonds.

Later yesterday, John Gordon, counsel for Aurelius, said he would have to take instructions as to whether his clients wished to appeal the judge’s ruling to the Supreme Court.

Mr Justice Cooke said any appeal would not delay the case resuming in the new law term later this month.

Yesterday Mr Gordon continued submissions for Aurelius and was again critical of the manner in which the state has discovered documents in the case.

Aurelius contends a “market-based solution” to taking out junior bondholders in AIB should have been adopted rather than seeking the SLO without any consultation with affected bondholders.

It claims the April SLO is an unnecessary and unlawful attempt to coerce it into a less favourable debt buyback scheme announced last month with a closing date for take-up set for June 13.