BoI seeks to target junior bondholders

BANK of Ireland is seeking to impose a discount of about 60% on a group of junior bondholders spared from an earlier offer two months ago.

In June the bank scrapped an offer to swap £75 million (€85.7m) of 13.375% perpetual unsecured bonds for cash or equity after some owners of the securities had “procedural difficulties”. It offered to pay £40.20 for every £100 owned, it said in a statement yesterday.

The lender withdrew its original offer two months ago as it faced a court challenge from an investor contesting the exchange of the securities, originally sold by the Bristol & West Building Society in 1991.

They became obligations of Ireland’s biggest bank when it bought the former mutual lender for £600m in 1997. The bank said on June 28 it had resolved the legal challenge.

Some holders of the notes didn’t hold the minimum amount required to swap them for new securities rather than cash, according to Mark Taber, who coordinated the bondholder campaign against Bank of Ireland.

The initial offer applied an 80% discount on bonds exchanged for cash, and 60% for those swapped for equity.

The offer doesn’t have a debt-for-equity alternative.

Bank of Ireland will hold an extraordinary general meeting in Dublin on September 9 regarding the Government’s accord to sell a 34.9% stake in the lender to a group of five investors.