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By Christopher Spink
LONDON, Oct 30 (IFR) - A group of HSH Nordbank bondholders have offered to swap their notes for equity in the state-controlled landesbank which is in the process of being privatised.
The bondholder group holds more than €700m (in principal value) of Tier 1 instruments and is being advised by PJT Partners and law firm Shearman & Sterling.
“A proposal has been presented to the bank and its owners that allows T1 holders to acquire HSH Nordbank by swapping some of their debt claims for equity in the company,” said the group in a statement published after the deadline.
“Each of the holders would be supportive of the proposal as a method of returning the bank to the private sector and to viability,” it continued.
The group said they would also support a range of alternatives “including remaining in situ, or if required, supporting modifications to the T1s to facilitate a transfer of ownership to a buyer”.
The statement did not reveal the owners of the bonds but said they had “substantial financial resources” and managed funds of over €60bn.
The deadline for bids for HSH Nordbank fell last Friday. Private equity groups Apollo, Cerberus and JC Flowers were amongst those who lodged offers, Reuters reported.
HSH Nordbank confirmed that it had received “several binding bids” but declined to specify the names of bidders. It did not comment on the bondholder group’s offer either.
In earlier rounds Chinese bidders, including Anbang Insurance, HNS and ICBC were mentioned as possible suitors.
Under European Commission rules on state aid, the privatisation must be completed by the end of February. Otherwise the bank could be wound down and its €79bn of assets sold.
The states of Hamburg and Schleswig-Holstein ended up taking control of the bank after problems emerged in its massive shipping loan portfolio during the financial crisis.
They currently own 89% of the lender’s equity. US investor JC Flowers, which used to own the bank, has 5% and other local banks have 6%.
HSH Nordbank has been trying to reduce its non-performing loans.
At the end of last year these stood at €13.6bn but they have already fallen below the €8bn level originally targeted for the end of this year, the bank said after the bid deadline expired on Friday.
The bank will report third quarter figures on November 29. (Reporting by Christopher Spink, Editing by Matthew Davies)