Cairn Capital Welcomes Restructuring of GUS 2013 Bonds
Story date: 2006.11.14
Speaking today after the release of Experian`s proposal to restructure c. £334m of GUS 2013 bonds, Deniz Akgul of Cairn Capital, the leading London based asset manager welcomed the proposed deal.
"Cairn will be voting in favour of Experian`s proposal announced today. Their plan to pay a fee of 75 cents to bondholders, and to offer them a choice of a coupon step up of 200bp or a put at par is a good deal for bondholders. It offers substantially better terms than those tabled back in the spring".
"Importantly it also fulfils Experian`s wish to take account of the needs of the credit swap market by ensuring a bond deliverable into credit swaps will remain available in the event of a subsequent change of control of the company".
"The technique of offering bondholders a coupon step up as an alternative to the more traditional "put at par" is an important innovation. We hope and expect coupon step ups will be used more widely to ensure stability in the credit swap market".
"We have appreciated working with Experian. Their open and engaged approach has made this deal possible. At a time of intense FSA scrutiny of corporate actions which impact the credit swap market, the way the bondholder group and Experian have worked together to reach an agreement should serve as a model for future situations, of which there will undoubtedly be many".
Note to Editors
Cairn Financial Products Limited (www.cairncapital.com) and another hedge fund have led the bondholder group which has been working with Experian to agree on how the 2013 GUS bonds would be restructured following GUS`s decision to split or demerge itself into two separate companies, only one of which would guarantee the 2013 bonds. Cairn and bondholders speaking for c. 81% of the 2013 bonds chose not to accept the company`s original restructuring proposal of 50 cents and a put at par. Holders of the 2013 bonds wanted a larger consent fee for waiving their rights to accelerate the bonds, and wanted to ensure that at least one GUS bond issue remained outstanding following the demerger so that credit swap contracts written on the company would still have value. Following the completion of the demerger, the bond trustee, HSBC, announced that it had received legal advice that the demerger was an event of default with respect to the 2013 bonds. Cairn and another hedge fund signed a confidentiality agreement with GUS in September and negotiations were completed in November.
For FSA Comments
http://www.fsa.gov.uk/pages/Library/Communication/Speeches/2006/0919_th.shtml
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