Reuters: Regulatory News: Early cutoff for Cruzeiro buyback fails to hit threshold-report

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Early cutoff for Cruzeiro buyback fails to hit threshold-report Aug 29th 2012, 12:31 Wed Aug 29, 2012 8:31am EDT * Early deadline offered to pay smaller discount * Valor says FGC to release report on repurchase * Cruzeiro holders seen abiding by buyback terms SAO PAULO, Aug 29 (Reuters) - Brazil's privately owned deposit guarantee fund FGC and Banco Cruzeiro do Sul, which was seized by the central bank in June, failed to garner the necessary support for a $1.59 billion bond repurchase plan in an early deadline, Valor Econômico reported on Wednesday, citing sources familiar with the situation. According to the newspaper, a number of international investors tendered their holdings of Cruzeiro do Sul bonds ahead of Tuesday's 1700 New York time deadline. The amount of bonds tendered, however, failed to attain the 90 percent approval rate stipulated in the buyback proposal, Valor added. Both Cruzeiro do Sul and the FGC expect to seal the repurchase by Sept. 12, the last day investors will be allowed to tender their bonds, Valor added. Cruzeiro do Sul was put under the administration of the FGC until the end of the year, after the central bank found accounting flaws that led to a $1.3 billion shortfall. According to the report, executives at the FGC are planning to release a statement with details on results of the early bond repurchase cutoff. Private bondholders represent about 57 percent of Cruzeiro do Sul creditors, Thomson Reuters and FGC data showed. Some of them told Reuters last week that the average 49.3 percent discount they are being forced to assume is failing to include the benefits of a potential sale of the bank, such as tax credits. Under terms of the early deadline, bondholders who tendered their bonds before Tuesday evening would be paid an average 55 percent value of their holdings. Calls made to the FGC and Cruzeiro do Sul for comment were not immediately answered. Both institutions hired the investment-banking units of Bank of America and HSBC Holdings to oversee the transaction. Link this Share this Digg this Email Reprints

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