Pimco accepts Novo Banco’s offer, unblocking the bank’s sale process

Pimco has accepted the terms of Novo Banco’s offer to repurchase bonds, meaning they unblock the sale process, a decision ECO confirmed. The green light will be given next Friday, in the general assembly of Novo Banco’s creditors. The deadline for accepting the offer ends on October 2.

Novo Banco presented senior bondholders a debt exchange proposal in order to gather an additional capital buffer of 500 million euros. Creditors would receive cash in exchange for their bonds, assessed at market price. A few weeks later, as ECO disclosed, a group of large investors — Pimco as well — stood against this offer.

In the beginning of September, during the general assembly, Novo Banco was able to assure 28% of that debt, but there wasn’t enough quorum for all debt lines, which meant the banking institution needs a new general assembly, which will take place on September 29. Although the exact percentage of bonds Pimco will agree to exchange is still uncertain, it is clear the company has a very important role in the process.

Pimco’s all clear makes it possible to reach the 500 million euros’ cushion, needed to conclude the sale of the transition bank to Lone Star. The North-American fund has committed to injecting one billion euros to reinforce Novo Banco’s capitals, which means the bank needs to reinforce its solidity throughout this bond repurchase operation.