The Galaxy securitization will be pushed further back in time, due to the extraordinary conditions created by the coronavirus.
According to the Alpha Bank’s original plan, the non-binding bids for the securitization were going to take place this week, with the prospect that the preferred investor would be selected by end of summer – early autumn and the transaction would be completed by November. The virtual data room has opened for the stakeholders since early February and interest was mainly expressed by Bain Capital, PIMCO, Lonestar and Centerbridge.
Given the circumstances, the schedule will be updated and the developments regarding the coronavirus will determine the timeline. If the situation normalizes within the next two months as is expected by the banks, the interested parties will be given one month, until end of July, to submit bids. Throughout the postponement, Alpha Bank’s data room will remain open to the stakeholders and will be enriched with data.
The preferred investor will acquire 95% of the mid- and low-grade securities of the €12 bn securities, as well as the majority stake in Cepal, the servicer currently owned by Alpha Bank (40%) and Centerbridge (60%).
Alpha Bank’s €12 bn securitization includes non-performing mortgage loans of all categories, as well as non-collateral loans of €1 bn. Alpha Bank will set up five special purpose vehicles (SPVs) to transfer the loans. The first SPV will only have bad mortgage loans, with a gross book value of €1.9 bn. The second SPV will include retail loans denounced by the Bank (consumer, small and very small enterprises) with a gross book value of €5.7 bn and the third will have non-performing loans of large and medium-sized enterprises, with a gross book value of €3.1 bn. The last two SPVs will include unsecured loans, a gross book value of €1 bn, and claims on leasing contracts of €0.3 bn.
The preferred investor, along with 95% of the mezzanine and junior securities of Galaxy will also buy a majority stake in the new Cepal. It is estimated that 80% will be transferred to the investor and Alpha Bank will keep the remaining 20%.
The sale of Cepal, however, requires its prior full acquisition by Alpha Bank. This step is part of the Bank‘s corporate transformation process that comes with the securitization plan to drastically reduce non-performing loans. The bad loan department of Alpha Bank will be carved out and incorporate with Cepal.
Original Source: Capital
Adaptation/Translation: Kiki Athanasiadis