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The Pimco – Eurobank negotiations. Where do they stand

Pimco and Eurobank exit the exclusive negotiation period without a deal. Eurobank did not find Pimco’s offer satisfactory and decided to continue the negotiations without exclusivity.

Eurobank entered into an exclusive deal negitiation with Pimco at the end of June, aiming to sell 80% of the FPS and 20% of the mezzanine note denominated securities, worth about € 7.4 billion. (project Cairo).

The decision was based on the evaluation of the non-binding bids received for the two projects and on Pimco’s “warm” disposition to close a deal fast. An indication of the intense interest of Pimci was that it had agreed to buy 95% of the mid-term and low-grade bond reductions (project Pillar) run by Eurobank. Pimco’s bid to buy 80% of Financial Planning Services (FPS) and 20% of Cairo mid-range and low-grade bonds was said to be at about 380m euros.

However, after carrying out due diligence, Pimco made a binding offer within the period of exclusivity which is reportedly significantly smaller than what was expected. A tough negotiation ensued, with both sides remaining firmly in place.

The period of exclusive negotiations ended on 30 September, without an agreement. Reportedly the negotiation continues without exclusivity.

Eurobank, however, under the terms of the tender, can now also address the other two investors whose non-binding bids had been considered satisfactory and had entered the second phase of the competition before it was frozen due to the exclusivity period granted to Pimco. The investors are the Fortress – doBank scheme and the Bain – Elliott – Cerved consortium, which may be invited to conduct due diligence procedures and submit bids for 80% of FPS and 20% of the mezzanine securities of the Cairo securitization.

With the purchase of FPS, the investor will manage the NPEs held by the Eurobank group in Greece for 10 years.

07/10/2019