Print

Mail

wiki links

Bondholders reach recapitalization deal with Cosmos Bank

Cosmos Bank Taiwan (萬泰銀行), which launched the nation's first cash-advance cards eight years ago, said yesterday that its bondholders had signed agreements for its recapitalization plan.

The cash-strapped lender's bondholders have agreed to convert their debt holdings into Cosmos equities to help improve the bank's financial structure, Cosmos said in a statement.

As of yesterday, bondholders held NT$4.685 billion (US$145.1 million) in the lender's debt, or 35.4 percent of the total, it said. The bondholders agreed to exchange their debt holdings for the lender's equities at NT$2 per share, which will represent a fully diluted stake of 4.2 percent in the bank, Cosmos said.

"Bondholders' participation in the recapitalization is a strong testimonial to Cosmos' future," bank chairman and president Hu Chien-chu (胡建助) said in the statement. "We look forward to finalizing the deal soon."

The bondholders' agreements depend on the planned capital injection of NT$29.7 billion (US$900 million) from US private equity firm SAC Private Capital Group LLC and GE Money.

The bondholders reportedly include Shin Kong Life Insurance Co (新光人壽), Shin Kong Commercial Bank (新光銀行), Mingtai Fire and Marine Insurance Co (明台產險), Allianz Taiwan Life Insurance Co (安聯人壽), South China Insurance Co (華南 產險), Chunan Credit Cooperative (竹南信合社), Sanjhih Township Farmers Association (三芝農會) and the life insurance unit of Bank of Taiwan (台灣銀行).

In September, Cosmos agreed to sell a combined 80 percent controlling stake to SAC PCG and GE Money through subscription to the lender's common shares, preferred shares and convertible debt issuance.

But there has been limited progress in the cash-injection plan and it might not close before today's deadline, amid market rumors that SAC may withdraw from the deal.

Cosmos spokesman Shih Kung-liang (施坤良) did not return calls yesterday.

However, in its statement Cosmos said it expected to achieve the cash injection this month.

“The SAC PCG and GE Money investment remains subject to the approval of Cosmos Bank's shareholders and other closing conditions, including receipt of financing and regulatory approvals, and is expected to close in December 2007,” the statement said.

Shares of Cosmos closed 6.61 percent higher at NT$2.42 yesterday. The news of bondholders's definitive agreements came after the local stock market closed.

This story has been viewed 996 times.