Novo Banco has reached 73.4% of its target for bondholders to accept a discounted bond buyback - a vital condition that must be met before any sale can go ahead to US vulture fund, Lone Star.
Novo Banco’s management issued a statement on Friday that several bondholders has had meetings in London and the bank now had €4.6 billion of orders for early redemption and that the remaining holders have until Monday to accept the terms of the buyback. Currently, the bank is short of €1.66 billion of pledges.
If the vote fails to get the required 75% uptake from bondholders, one option is to accept a lower level of participation, another is to ask bondholders to inject fresh capital into the loss-making bank and a third is to forget all attempts to sell the bank and wind it up.
On July 25, 2017, Novo Banco launched a tender offer for the acquisition of several senior debt issues that had been sold directly and indirectly by the bank, with the objective of strengthening the bank's equity before concluding the transfer of the bank to Lone Star.
This process has been going on since the end of March, when the zero euro transfer of ownership to Lone Star was announced – a much criticised choice of winner in a contest that saw the Bank of Portugal turning down cash offers in the area of €3 billion.
Agreement over a further €1.666 billion of bonds is needed before close of play on Monday.
