The FINANCIAL — On Monday, 8 June 2009, the two-week subscription period will start for "Raiffeisen Participation Capital 2008/2009" issued by Raiffeisen Zentralbank Österreich AG (RZB).
In order to strengthen its risk-bearing capacity and to prevent competitive disadvantages, RZB has issued a total of 2.5 billion euros in participation capital within the framework of an issuing programme in recent months. The EU competition authorities have stipulated that issues under the stated conditions may only be subscribed by the government up to a maximum of 70 per cent. At the same time subscriptions by existing shareholders may only be qualified as placement with private investors for up to 10 per cent of the volume. Consequently, RZB has structured the issue in such a manner that investors are now being offered a share of 500 million euros, which stems from the original subscribers from the sphere of RZB shareholders.
The issue targets institutional investors, but not retail investors. The issue price for the participation certificates amounts to 100 per cent of the nominal amount of 1,000 euro per certificate.
A summary of the offer is presented below. Details can be found in the Prospectus approved by the Financial Market Authority on 5 June 2009, which is available free of charge in printed form at RZB, Am Stadtpark 9, 1030 Vienna, Austria, from 8 June 2009. The offer consists of a public offer of the participation certificates to investors in the Republic of Austria. Outside of the United States, these participation certificates are offered exclusively within the framework of a public offer pursuant to Regulation S of the U.S. Securities Act.
Offer:
Up to 500,000,000 euros in participation capital, broken down into 500,000 participation certificates with a nominal value of 1,000 euros each.
Subscription period:
8 June to 19 June 2009 (tentatively).
Offer price:
100 per cent of the nominal amount, corresponding to 1,000 euros per participation certificate.
Participation dividends:
2009–2013: 8.00 per cent p.a.
2014: 8.50 per cent p.a.
2015: 9.00 per cent p.a.
2016: 9.75 per cent p.a.
Following this, an annual increase of 1 percentage point, but limited to a maximum of the 12M EURIBOR plus 10 per cent.
The participation dividend will be disbursed only if there is adequate coverage by the annual profit as stated in the individual financial statements of RZB. No dividend payment shall be made, nor shall such missed payment be made at a later date if an annual loss is posted. Furthermore, it is possible that the amount of the participation dividend will be lower than presented or not be paid at all, in the event that the annual profit is too low or if higher-ranked securities must be serviced. If no participation dividend is paid despite coverage in the form of distributable profits, a corresponding subsequent payment will occur upon redemption of the capital in accordance with the regulations governing the participation certificates.
Cancellation of the participation certificates/Early redemption
The participation capital is provided to the issuer for the duration of the enterprise and cannot be cancelled by the party providing the participation capital.
Upon resolution by the Annual General Shareholder Meeting, RZB may redeem the participation capital at any time. Redemption shall occur at 100 per cent of the nominal amount; from 2019 this value shall increase to 150 per cent of the nominal amount, insofar as the enterprise value of RZB has risen correspondingly.
What are participation certificates?
Participation certificates are a special form of profit participation rights, which are attributable to a bank’s core capital. Key characteristics are:
no pre-defined maturity;
redemption must be resolved by the Annual General Shareholder Meeting;
dividends are dependent on annual profit;
participation certificates participate in the issuer’s losses in the same manner as shares, up to their nominal value;
subscribers have the right to participate in the Annual General Shareholder Meeting and have the right to receive information. In contrast to holders of ordinary stock, participation certificate holders do not, however, have voting rights at the Annual General Shareholder Meeting.
Discussion about this post