Bank of Ireland Won’t Pay Coupons on Notes 19.01.10

“The EC has indicated that in line with its policy and pending its assessment of the restructuring plan that the bank should not make coupon payments on its Tier 1 and Tier 2 capital instruments unless under a binding legal obligation to do so,” the company said

**The suspension of the coupon payments means the bank won’t be able to pay dividends for a year. If Bank of Ireland can’t pay the 250 million-euro dividend it’s due to make to the government for its investment, the payment may be made in shares. **

It was always going to be…

Hello Taxpayer

online.wsj.com/article/BT-CO-201 … theadlines

sorry, Links here:

bankofireland.com/press_room … 00557.html

Nothing from Dep of Fin… YET, how come they were not advised/prepared ?

So

for those of us for whom the implications are not immediately obvious what does this mean?

That the existing shareholders will be further diluted as BOI issues new shares to the taxpayer in lieu of a coupon.

280 mn euro due in 8% divis gives 15% ownership? Am I diluting that right?

edit: just seen the link cavok put up to the BoI site - where do they get 250 mn from? I thought it was 3.5 bn of 8% preferreds?

grand

I figured that.
Any impact on the guarantee to bond holders?

I thought it would be €250 million divided by the current market price of one BOI share = no. of newly issued shares?

This number of shares divided by the total number of ordinary shares issued to date would give you the % of the company that is being handed over.

If they did it that wat (ie. honestly) we would get far better value for money then we got for the recapitalisation money.

From the release:

I suppose see if this affects the share price tomorrow…

How can it not?

when will the fools that pumped them north of €3 only recently eventually realise that toilet paper is more valuable?

XX

There appears to be 1004 million ordinary shares issued to date. Thats over a billion!! Open to correction.

ise.ie/app/equityDetails.asp?equity=11904

At todays price of €1.48, €250 million would buy you 168,918,910 shares.

This would give you a new total for outstanding ordinary shares of 1172 million.

Giving the taxpayers’ new shares 14.3% of the company, of voting rights and of any future dividends.

There is no way BOI will allow this to happen.

The taxpayer will be given an IOU written on the back of a fag box and told to fuck off.

Thanks for that data

Well… it goes a little something like this (ahem)

The knee bone’s connected to the…
Thigh bone.
The thigh bone’s connected to the…
Hip bone.
The Hip bone’s connected to…
etc…etc…etc

IRE is pretty flat over in NY at the moment.

The 15% figure quoted above is wrong as far as I know. Paying the coupon in shares would be highly unconventional and potentially illegal. The more conventional approach is to convert the preference shares to ordinary shares. This leaves the government with majority ownership. This risk has long been priced into the shares.

Well, this is not the case, as far as I can see:
bankofireland.com/press_room … 00557.html

Now, there have been rumours that BoI is trying to squeal out of this, no doubt AIB will find itself in the same position too. As you say, a full swap of the preferences is one way. The fact that nothing has happened so far suggests to me that it is the only way (i.e. the unpleasantest way) found so far.

Greg in the comments on Irisheconomy:
irisheconomy.ie/index.php/20 … ment-32576

Bother.

edit: the next line in the DoF document is:
“The voting rights associated with such shares may be exercised from the date the dividend became payable.”

So, it looks like the state will have 14.3% additional voting rights in BoI even if the shares are not issued.

Bond, Eoin points out on irisheconomy:
irisheconomy.ie/index.php/20 … ment-32607

So that explains the 250 mn or thereabouts.

The oposition need to call the government out on this one. If the banks can wriggle out of this one then the NAMA legislation is not worth the paper its written on.

I think anyone with a brain knew this already.

Let those who were participating in the fiction explain this one away.