Co-operative Bank News: Hedge Fund Threatens Bank Rescue
News Updates from The Co-Operative Bank
Co-operative Bank News Update: Hedge fund threatens bank rescue. The Telegraph reported that the Co-op rescue plan is threatened as vulture funds circle it.
It has been reported that so called vulture funds headed by Aurelius Capital and Silver Point Capital from the United States have amassed blocking stakes in two portions of investment of the Co-operative bank’s subordinated debt of over £1.2bn. It is thought now that the bank will implement a rescue plan as the group does not have enough funds to make up a one and a half billion pound shortfall that exists and has been identified by the regulator. The plan is that the group will supply one billion and the bank’s bondholders will have to make up the shortfall of five hundred million pounds. This will lead to the bondholders taking a hit of almost one and a half billion pounds of debt.
The consortium that are operating the hedge fund are, however, thought to have a large enough holding that they will be able to block the rescue attempt through taking a position blocking two portions of the debt recovery plan worth about three hundred million pounds. If this happens the Co-op us likely to have to find another one hundred million pounds if they are to have any hope of getting the rescue plan through.
The hedge fund, however are taking a high risk strategy as the Co-operative Bank have said that they will be unable to inject any further money into the deal without hitting problems with their own lending syndicate. Failure to raise the one and a half billion necessary may see the Co-op put into a resolution situation and also see it being wound down. If this happens then bondholders would lose more than five hundred million pounds. This however is not thought likely to happen although it is widely speculated that the bond holders are trying to negotiate for better terms and that will include a larger stake in the equity of the bank.
Updates on the Co-Operative Bank
These are obviously troubling times for the Co-operative bank as it struggles in a cold economic climate. There is no doubt that that this part of our history and a familiar sight on the high streets of many towns and cities would be sadly missed if it were to disappear. It is certain that all eyes will be on what happens over the coming weeks and months to see how the threat of the take over will pan out for the bank.
Visit the official website at http://www.co-operativebank.co.uk/
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