18/07/2014 – Cinco Dias
The purchase of the toxic assets of Catalunya Banc by Blackstone for joint €3.6 billion will be supported by €572 million in public assistance from the Frob (Spanish Fund for Orderly Banking Restructuring).
The “Hercules” portfolio acquired by Blackstone has got a nominal value of €6.4 billion plus provisions reaching €2.2 billion. The transaction has been conducted through the portfolio transfer to an asset securitization fund for over €4.2 billion.
Blackstone will redeem its part and the rest will be paid by the Frob through a junior bond whose task will be to absorb potential losses generated by the soured loans. Only if default and foreclosures exceed the €572 million aid, Blackstone will lose the money invested in “Hercules”.
The Frob is very pleased with the sale as it did not demand the initially agreed €1.5 billion support from the public coffers and obviously its success boosts chances of selling Catalunya Banc in the first round. Today the binding offers for the nationalized entity must be delivered to the Fund.
And it seems the traditional banks bidding for the entire Catalonian entity look less favourably at the acquisition than international investors.
The Frob tells the portfolio – including 59% of soured loans – found a purchaser at the second round of the bidding, out of four binding offers. The second round allowed to obtain by 10.7% better price and the final amount crossed by 20% the average offer. The auction was “a tug-of-war”.
Original article: Cinco Días (by Miguel Moreno Mendieta)
Translation: AURA REE