Wednesday, August 15, 2012

Brazil's FGC Offers 49.3 Percent Discount In Cruzeiro Bond Buyback


Wed., August 15, 2012
Bondholders of Brazilian troubled bank Banco Cruzeiro do Sul will receive about half of their investments as part of a bond repurchase program, an executive said on Tuesday, Reuters reported. Cruzeiro do Sul was seized by Brazil's central bank on June 4 and put under the administration of privately held deposit guarantee fund FGC the same day. FGC and Cruzeiro launched the global bond buyback plan that will receive tenders until Sept. 12, said Celso Antunes, the FGC executive currently in charge of the bank. According to Antunes, the tender offer is the best solution for Cruzeiro do Sul, since it would help lower the bank's debt load and boost its allure among potential suitors. FGC, which offered to buy the bank's bonds at a 49.3 percent discount, has a mandate to find a buyer for the lender for 180 days that could be extended once more. "We are working hard to find a market solution for this situation," Antunes said at a news conference. He reiterated that the tender needs the adhesion of at least 90 percent of Cruzeiro bondholders to succeed. Despite the large discount, bondholders might agree to the buyback or else risk seeing the bank forced into liquidation - a decision that would wipe out any remaining value for their bonds. It is also ruling out a government- or banking sector-led bailout of Cruzeiro, analysts told Reuters on Tuesday. The tender will also be conditional to a firm bid to buy control of Cruzeiro do Sul, Antunes added.

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