GTBank on the 4th of February, announced a tender offer for its $500mn Eurobond maturing on 19 May 2016. The tender price of $1,002.5 per $1,000 held represents a 0.25% premium to face value. The offer opened yesterday, 4th of February and results should be announced on 11 February 2016. Being a tender offer, holders who do not sell at expiration of the offer will get paid principal and interest upon maturity in May.
This is a logical step for management given the market yield on the instrument (9.6% vs. coupon of 7.5%), as it helps to save interest on the outstanding Eurobond, and it also helps to reduce the bank’s cost of funds.
We believe that the bank could save $10mn in interest cost if all bond holders tender their securities by 10 February 2016.
We see this decision as a show of FX liquidity strength from GTBank given apparently stressed conditions in the market place.
In its statement, the bank said, “If the offeror decides to accept valid tenders of securities pursuant to the offer, the total amount the offeror will pay holders on the settlement date for each $1,000 in principal amount of securities accepted for purchase pursuant to the offer will be an amount (rounded to the nearest $0.01) equal to the Purchase Price and Accrued Interest on such $1,000 in principal amount.
“If, following acceptance of securities for purchase by the offeror pursuant to the offer and following purchase of the relevant securities on the settlement date, a holder continues to hold in its account with the relevant clearing system less than US$200,000 in principal amount of securities.
In order to ensure that it will be possible to trade any residual holding in the Clearing Systems such Holder would need to purchase an additional principal amount of Securities such that its aggregate holding amounts to at least US$200,000,”
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