(Updates with details of subordinated bondholders starting in second paragraph)
July 8 (Bloomberg) -- Bank of Ireland Plc said it plans to raise 1.91 billion euros ($2.7 billion) in a share sale, as the nation’s largest lender seeks to raise capital and avoid state control.
Holders of about 79 percent of eligible securities, excluding some Canadian and British notes, agreed to swap their securities for equity or cash at a discount, the Dublin-based lender said today in an e-mailed statement. The bank said the exchange will raise at least 2 billion euros of capital.
Bank of Ireland must raise 5.2 billion euros to shore up its balance sheet against mounting bad loan losses and meet regulatory capital targets. Already 36 percent state-owned, the lender has been seeking to raise money from private investors to avoid becoming the last domestic lender to fall under state control. The bank, led by Chief Executive Officer Richie Boucher, must raise the bulk of the capital by the end of this month.
If Bank of Ireland succeeds in raising some of the 5.2 billion euros demanded by regulators from investors, it will be the only Irish bank to raise money from money managers since the financial crisis of 2008.
The government has committed to underwriting the bank’s rights offering at 10 cents per share. The shares were unchanged at 12 euro cents in Dublin trading today.
Depending on how many existing shareholders buy new stock in the share sale, the government may own between 29 percent and 70 percent of the lender, Bank of Ireland said.
Bank of Ireland also said that attempts to raise funds from private-equity companies haven’t succeeded.
“The bank has had extensive discussions with a number of private-equity firms and has received proposals for material investments in the bank,” the lender said. “As at the date of this announcement these proposals, which had certain conditions, have not been brought to a successful conclusion.”
The Irish Central Bank also extended until Dec. 31 the bank’s deadline to raise a further 510 million euros, according to the statement. The government and the bank expect to raise this in part through “further burden sharing with bondholders,” the bank said.
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