Reuters: Regulatory News: UPDATE 2-Early deadline extended for Brazil's Cruzeiro buyback

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UPDATE 2-Early deadline extended for Brazil's Cruzeiro buyback Aug 30th 2012, 02:43 Wed Aug 29, 2012 10:43pm EDT * Early deadline pushed back to Sept. 5 * FGC, Cruzeiro 'confident' holders to pass plan * Cruzeiro holders seen abiding by buyback terms SAO PAULO, Aug 29 (Reuters) - Brazil deposit guarantee fund FGC and Banco Cruzeiro do Sul, which was seized by the central bank in June, have extended the early deadline for a $1.59 billion bond repurchase plan that failed to garner the necessary support. FGC pushed the early deadline back to Sept. 5 "due to the considerable number of offers from investors that could not comply with the original timeline," it said in a Wednesday securities filing. The number of Cruzeiro do Sul's global debtholders that tendered their holdings ahead of an early deadline of 5 p.m. EDT (2100 GMT) Tuesday came in "within expectations," FGC said in an earlier filing on Wednesday. The filing said both institutions expect to attain the 90 percent approval rate stipulated in the buyback proposal by the final expiration on Sept. 12. The FGC is still looking for potential buyers of the São Paulo-based bank, the filing added. Cruzeiro do Sul was put under the administration of the privately owned FGC until the end of the year, after the central bank found accounting flaws that led to a $1.3 billion shortfall. Private bondholders represent about 57 percent of Cruzeiro do Sul creditors, Thomson Reuters data showed. Some of them told Reuters last week that the average 49.3 percent discount they are being forced to assume fails to include the benefits of a potential sale of the bank, such as tax credits. Despite the large discount proposed, bondholders might agree to the repurchase or else risk seeing the bank forced into liquidation - a decision that would wipe out any remaining value for their bonds. With the tender, the FGC is also seeking to rule out a government- or banking sector-led bailout of Cruzeiro do Sul. Under the terms of the early deadline, bondholders who tendered their bonds before Tuesday evening would be paid an average 55 percent value of their holdings. A higher-than-expected tender turnout for the senior bonds due in 2015 and 2016, and the subordinated debt maturing in 2020, allowed Cruzeiro do Sul to waive certain terms in the bonds that would have triggered immediate repayment. Both the FGC and Cruzeiro do Sul hired the investment-banking units of Bank of America Corp and HSBC Holdings Plc to oversee the transaction. Link this Share this Digg this Email Reprints

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