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UPDATE 1-Austrian province of Carinthia says Heta buyback offer successful
October 10, 2016 / 9:16 AM / a year ago

UPDATE 1-Austrian province of Carinthia says Heta buyback offer successful

* Carinthia says 98.7 pct of Heta bondholders accept offer

* Acceptance rate of senior bondholders at 99.6 pct

* Among junior bondholders, 89.4 pct accept (Adds detail, background)

VIENNA, Oct 10 (Reuters) - Creditors holding almost all the outstanding bonds of failed lender Hypo Alpe Adria have accepted a debt buyback offer, a major step towards drawing a line under Austria’s worst postwar financial scandal, the province of Carinthia said on Monday.

Two years after “bad bank” Heta Asset Resolution was created to wind down Hypo’s assets, Austria hopes the hard-won deal will restore its credibility with foreign investors.

Holders of 98.7 percent of the outstanding bonds accepted the offer, said Carinthia, which guaranteed the bonds and made the offer. Creditors holding two-thirds of the bonds had to accept the offer for it to be binding on all.

Carinthia offered to buy back the bonds at a discount to the total 11 billion euros ($12.3 billion) it guaranteed as it says it cannot afford to pay the full amount. The case is seen as a test for new European bail-in rules.

Under the agreement Carinthia - helped by loans from the federal government - will pay senior creditors 75 percent of the bonds’ original face value and junior creditors 30 percent.

They can then reinvest the proceeds in a specially issued government bond, which will bring the overall repayment rate for senior bondholders to about 90 percent and to around 45 percent for junior bondholders. ($1 = 0.8928 euros) (Reporting by Kirsti Knolle; editing by Francois Murphy)

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