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Cerberus Negotiates 10% Stake In Liberbank Following Capital Increase

19 October 2017 – Expansión

Cerberus is finalising its entry into Liberbank. The US fund is negotiating to buy a stake that would represent between 7% and 10% of the bank’s share capital following its capital increase amounting to €500 million. Sources familiar with the negotiations explained to Expansión that, in this way, Cerberus would earn a seat on the entity’s Board of Directors.

If the negotiations are successful, Cerberus would increase its commitment to the Spanish economy, having remained active with the purchase of several portfolios linked to the real estate sector. In fact, the fund is also holding exclusive negotiations with BBVA to buy its real estate platform Anida and some of that bank’s real estate exposure.

Financial sources indicate that the management team at Cerberus has decided to go all out for the Spanish financial sector after the fund failed to get past the first round of the bidding for the company created by Santander to shelve 51% of Popular’s real estate risk, which was awarded to Blackstone in the end.

Liberbank is planning to close the capital increase in the middle of November when it will also reduce the number of directors from the current figure (15) to 11. It is likely that Oceanwood, the largest private shareholder, with a 12.1% stake, will also have one representative on the Board once the capital increase has been completed. Liberbank currently has 15 directors, although two of the positions are vacant following the resignations of Luis Garicano in 2016 and Pitarch Rodríguez this year.

Core shareholders

Liberbank’s core shareholders, comprising Oceanwood, Corporación Masaveu and the Mexican business Ernesto Tinajero, and the foundation heirs of the founder savings banks (CajAstur, Caja Cantabria and Caja Extremadura) have committed to participating in the capital increase, with a percentage of almost 40%, according to sources familiar with the operation.

The idea of the former savings banks is to carry out a white operation: they will sell some of their shares with rights in order to be able to participate in the capital increase without having to invest new capital. This move will result in a dilution of their stake, and, in turn, will give rise to the entry of at least one new major shareholder (…).

Liberbank has already taken its first steps towards conducting the capital increase. This week, it decreased the nominal value of its shares, from €0.90 to €0.02 to comply with the regulations. Meanwhile, the entity announced that, following the end of the voluntary conversion period for three series of convertible obligations, it has received requests to convert 293,879 obligations. Therefore, the entity informed the CNMV in a statement that it will issue 2.39 million shares, equivalent to 0.28% of its share capital.

Original story: Expansión (by S. Arancibia, R. Sampedro and N. Sarriés)

Translation: Carmel Drake