The management of Banca Transilvania has asked its shareholders to approve the launch of bonds that will be convertible to shares worth 25 million dollars (19.2 million euros). The move will allow the World Bank's investment arm, the International Finance Corporation (IFC), to become a shareholder in the bank.
The IFC will buy convertible bonds issued by Banca Transilvania for 20 million dollars (15.4 million euros). The rest of the issue, up to a total of 25 million dollars, is to be offered to other shareholders in the bank and investors on the capital market.
The bonds will mature in five years and come with a LIBOR plus 3% interest rate that will be paid every six months.
At the general meeting of shareholders called for April 11, Banca Transilvania will propose increasing its share capital by nearly 70% - 915bn ROL (25 million euros) - through new capital inflows and the issuing of bonus shares.
"We need capital to develop. Our mortgages are in high demand and this is why we need long-term money. The additional capital will also consolidate our position in terms of attracting new streams of funding," said Horia Ciorcila, the chairman of the bank's board of directors. The method of converting the bonds to shares, explained Ciorcila, would be decided by the general meeting of shareholders.
"Converting to shares will be possible gradually, not only in five years' time. We will also decide on the formula for calculation at the general meeting of shareholders," he said. Banca Transilvania is listed on the Bucharest Stock Exchange, where the bank has a capitalisation of 480 million euros. At the current market value, IFC will get some 3% in the bank. IFC's joining the ranks among the bank's shareholders will ensure easier access to foreign lines of credit. In this way Banca Transilvania will try to sustain its development over the next few years, in the absence of a strategic investor. Its 15% stake makes EBRD the most important shareholder in the bank, with the other shareholders owning less than 5% each. The bank's founders and EBRD control the majority stake.
"Banca Transilvania is consolidating its position on the market by a new capital increase and we are extremely happy to announce IFC's participation in this operation.
"We believe the current shareholder structure, together with the support from leading financial institutions like EBRD, IFC, FMO and DEG, will allow for the fastest possible development. For this reason we are not considering any negotiations with a strategic investor," explained Ciorcila.
Besides the 19.2 million euros the bank plans to raise from the bond issue, the bank is also planning to raise a further 14.5 million euros from shareholders by issuing new shares. Shareholders will discuss the issuing of 133.5 million new shares that will be offered to the bank's shareholders at 4,000 ROL, less than one third of the price on the market.
Shareholders will have the right to subscribe one new share for every ten shares held. vlad.nicolaescu@zf.ro
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