Dukes refuses to talk to dissident bondholders

NATIONALISED Anglo Irish Bank’s chairman Alan Dukes has ruled out talking to a dissident group of bondholders and called on them to accept a deeply discounted €1.6 billion debt exchange.

Bondholders in Anglo Irish Bank are seeking to block the lender’s proposed exchange of subordinated debt at a discount of 20 cents per euro.

Addressing reporters after delivering a speech to chartered accountants in Dublin, Mr Dukes said he was not prepared to consent to the consortium of bondholders’ demand for discussions aimed at reaching a “fair and consensual resolution”.

“No,” he said. “We have published an offer and people will decide whether they take it up or not. I hope they do.”

Anglo Irish, brought under state control last year, is forcing bondholders that do not take up the offer to accept just 1 cent per €1,000 to redeem their floating notes due 2014, 2016 and 2017. But a consortium of investors who hold about €690m of lower Tier 2 debt are planning to vote against the offer.

“In an astonishing move, Anglo Irish is attempting to strong-arm noteholders to vote in favour of the exchange offer by threatening to eliminate minority dissenting noteholders’ rights to repayment of monies loaned by them to Anglo Irish,” Brown Rudnick, a law firm representing the noteholders, said in a statement. Analysts at Glas Securities in Dublin have estimated that Dublin’s bill for bailing out Anglo would be cut by €1.65bn if there was a 100% takeup of the debt swap and a repurchase of more junior Tier 1 debt also announced this month.

The bondholder meetings to approve the exchange must have a minimum attendance of holders of 66% of the notes, three-quarters of whom must agree to the changes in order for it to pass.

Anglo Irish Bank’s Dukes, a former leader of Fine Gael, also called for Ireland to set up a second state-owned “bad bank” to deal with distressed assets not being taken on by the National Asset Management Agency. “We would then have two major banks (Bank of Ireland and Allied Irish Bank) with cleaned up balance sheets to move forward with,” he said.

NAMA was set up to take the most toxic loans out of Ireland’s banks, but has said it needs loans to generate income and is eyeing a profit of €1bn over a 10-year lifespan.

Mr Dukes said Anglo could take on some of those loans not under NAMA control. “We have to set up a solution in Ireland. I’m quite flexible. We would have no prescription as to how it should be run. Clearly other people have to be involved,” he said.


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