Parex looks to raise more capital

  • 2010-02-03
  • From wire reports

RIGA - Parex bank shareholders at an extraordinary general meeting on Jan. 29 approved a proposal to issue Eurobonds in the amount of 175 million euros, reports Nozare.lv. The largest deposit holders in Parex will be offered the opportunity to acquire the bonds using their deposits at the bank, in effect exchanging their deposits for shares in the new bonds.
Each bond will pay an interest rate of 5 percent with a maturity of two years, with the bank having early redemption rights. The planned issue date for the bonds is Feb. 15 of this year. The bonds will be issued in several installments.

The objective of the issue is to ensure economically and legally beneficial means for restructuring and stabilizing the bank’s deposits. Inga Saleniece, Corporate Communication Director for Parex, indicated that deposit restructuring at the bank could have a positive effect both on the restrictions on the deposits at the bank, and on the possibility of beginning to repay the money invested by the state. At the same time, the removal of restrictions is one of the preconditions for the resumption of lending, which is at present deemed essential to the stimulation of Latvia’s overall economic development.

Parex could turn to the eurobond market later in order to re-finance its debts to the state, as well as with other aims, the bank’s chairman, Nils Melngailis, said in an interview.  These eurobond issues would most likely be offered to all participants in the market with the help of an intermediary consortium.