VIENNA, Oct 20 (Reuters) - An offer to creditors of Heta, the Austrian “bad bank” formed after the collapse of Hypo Alpe Adria, is expected by the end of the year, an adviser to the federal government said on Tuesday.
The collapse of Hypo, which grew rapidly with the help of bond guarantees of up to 25 billion euros ($28.4 billion) from its home province of Carinthia, has become a lingering burden for Austria’s government and public finances.
Austria has agreed settlement terms with Hypo’s former owner, the German state of Bavaria, and is seeking to facilitate an agreement between Carinthia and Heta creditors who own bonds covered by roughly 11 billion euros in guarantees.
An offer was likely to be put to them by the end of the year, said an adviser to ABBAG, an Austrian state holding company formed as part of efforts to resolve the crisis.
ABBAG is acting on behalf of the federal government.
“That would be the target,” the adviser told reporters on condition of anonymity when asked whether the offer would be made this year, without providing details.
The process was expected to be relatively quick once an offer is made, he said, with creditors having four weeks to respond. If the value of bonds tendered to the offer reached two thirds of the total, the agreement would go live, he said.
Under a law passed by Austria’s parliament, if two thirds of creditors accept the terms, the agreement will apply to all holders, including hold-outs.
$1 = 0.8791 euros Reporting by Francois Murphy and Alexandra Schwarz-Goerlich; editing by David Clarke