GTBank offers to redeem Eurobonds, launches cash tender offer

By Our Correspondent |

In a rare demonstration of good faith and candour, GTBank has invited holders of its U.S.$500,000,000 7.50 per cent which were unconditionally and irrevocably guaranteed by the bank to tender any and all of their Securities for purchase by the bank for cash.

This is the subject of a tender offer memorandum dated 4 February 2016 issued by the bank and made available to Business Hallmark.

According to the bank, through the offer, it is seeking to deploy its available U.S. dollar liquidity to the repurchase of the Securities ahead of the scheduled maturity in May 2016.

Explaining further, it avers that this liability management exercise would allow the Bank to efficiently manage its liquidity by addressing in full debt maturing in 2016.

The memo however outlines that the extent to which this goal can be achieved through the Offer will depend on the number of Securities that will be tendered in the Offer, given the voluntary nature of the Offer, while emphasizing that adequate steps have been takento maintain cash available to repay any outstanding Securities not tendered in full at maturity.

On the specific terms of redemption, it proposes that for accepted valid tenders of Securities pursuant to the offer, the holders will get, ‘for each U.S.$1,000 in principal amount of Securities accepted for purchase an amount (rounded to the nearest U.S.$0.01) equal to the purchase price and accrued interest on such U.S.$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 U.S.$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 U.S.$200,000,’ the memo further spelt out.

On the issue of purchase price, GTBank is proposing to pay for Securities accepted by it for purchase pursuant to the Offer at the fixed Purchase Price of U.S.$1,002.50 per U.S.$1,000 in principal amount of such Securities.

It also states that an amount equal to accrued and unpaid interest will also be paid as consideration in respect of all Securities validly tendered and delivered (and not validly withdrawn) and accepted for purchase by the Offeror pursuant to the Offer from, and including, the immediately preceding interest payment date for the Securities to, but excluding, the Settlement Date.

The memo outlines further modalities:

‘The results of the Offer are expected to be announced on or about 11 February 2016. The Offeror will announce the aggregate principal amount of Securities accepted for purchase. Such information will be notified to Holders as described in the Tender Offer Memorandum and shall, absent manifest error, be final and binding on the Offeror and the Holders.

Once the Offeror has announced the results of the Offer in accordance with applicable law, the Offeror’s acceptance of Tender Instructions in accordance with the terms of the Offer will be irrevocable. Tender Instructions which are so accepted will constitute binding obligations of the submitting Holders and the Offeror to settle the Offer.

In order to receive the Purchase Price and Accrued Interest, holders of Securities must validly tender their Securities by the Expiration Deadline, by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Tender Agent by the Expiration Deadline. Any amount tendered must be equal to or greater than the Minimum Denomination of U.S.$200,000. See the Tender Offer Memorandum for further details on submitting a Tender Instruction.

Once the Offeror has announced the results of the Offer in accordance with applicable law, the Offeror’s acceptance of Tender Instructions in accordance with the terms of the Offer will be irrevocable. Tender Instructions which are so accepted will constitute binding obligations of the submitting Holders and the Offeror to settle the Offer.

Announcements in connection with the Offer will be made by the issue of a press release through the relevant Reuters International Insider Screen, the London Stock Exchange and on a recognized financial news service or services (e.g. Reuters/Bloomberg) as selected by the Offeror and by the delivery of notices to the Clearing Systems, for communication to Direct Participants. Copies of all announcements, notices and press releases can also be obtained from the Tender Agent, the contact details for which are set out below.

The stated expiration deadline as regards the offer, which namely is the last time and date for Holders to tender Securities in order to be able to participate in the Offer and to be eligible to receive the Purchase Price and Accrued Interest on the Settlement Date as well as the deadline for Holders who have tendered Securities in the Offer to be able to validly withdraw such Securities is 5.00 p.m. on 10 February 2016 while the date for the announcement of the final aggregate principal amount of each series of Securities accepted for purchase is 11 February 2016.’

Equally, the expected settlement date for securities validly tendered and accepted for purchase by the bank has been put at 16 February 2016

Meanwhile, Lucid Issuer Services Limited has been appointed by the bank as tender agent in respect of the Securities for the purposes of the offer while J.P. Morgan Securities Plc and Morgan Stanley & Co. International Plc have been appointed as Dealer Managers.

Analysts aver that the launch of the offer is indicative of the financial strength of the Bank as well as its commitment to excellence and best practices. It is also to be noted that it is also the first transaction of its kind in Nigeria.

According to them, one of the possible reasons why the bank had to do this is to calm the nerves of international bond holders, worried that Nigerian banks will not be able to meet their dollar obligations in view of the scarcity of dollars within the local market.

By advising investors who may be worried about the dollar illiquidity and perhaps the inability of the bank to pay on the bonds in May 2016 to submit their notes for redemption prior to maturity, the bank is definitely making a statement that it yet remains safe, strong and capable.