MrB Posted November 18, 2015 Share Posted November 18, 2015 So, after the 100 to 1 split, they minimum price of the offer will be EUR 0.30 (or EUR 0.03 for current shares). This is 50% above the current price and is certainly not anywhere nearly as bad as some thought in the potential for using the prior average trading price. Obviously, i need understanding the nominal reduction in share value to fully understand what's going on here, but the pricing and total amount of issuance don't seem anywhere near as bad as the worst case scenario I envisioned. EUR 0.003 for current shares. That's probably closer to where the book building is likely to price. Yes...I see. My mistake on the math. Far worse than I expected then... Just did some searching and found out what the nominal value means too. It's not a 70% reduction in value as the nominal price is totally meaningless relative to the trading price. It's just the floor price in which the company can list equity - so basically it's a hint at where the offering will likely price in calculating the dilution of the EUR 700mm offering. 0.30 is the legal minimum price at which you can issue shares. See slide 5 of the Piraeus cap raise presentation to get an idea of the maths of the process. Link to comment Share on other sites More sharing options...
rijk Posted November 18, 2015 Share Posted November 18, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Link to comment Share on other sites More sharing options...
Eye4Valu Posted November 18, 2015 Share Posted November 18, 2015 http://www.ekathimerini.com/203562/article/ekathimerini/business/eurobank-share-offering-at-just-001-eurosshare Offering was at .01, or 1 euro per share following the reverse split. Link to comment Share on other sites More sharing options...
Eye4Valu Posted November 18, 2015 Share Posted November 18, 2015 Fairfax and others paid .31 euros per share in 2014 offering. Fairfax averaged down following that offering and prior to Tsipras holding the referendum. Now they purchase at .01 euros. What would you guess their cost basis is? What is always surprising is how optimistic Prem is on the situation. Wilbur Ross too. They are convinced this will work out longer term. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted November 18, 2015 Share Posted November 18, 2015 Fairfax and others paid .31 euros per share in 2014 offering. Fairfax averaged down following that offering and prior to Tsipras holding the referendum. Now they purchase at .01 euros. What would you guess their cost basis is? What is always surprising is how optimistic Prem is on the situation. Wilbur Ross too. They are convinced this will work out longer term. Yea - but they can't consider their sunk costs when evaluating the forward looking prospects. At the time they invested 0.31 looked attractive to them. During the political fallout, both obviously thought that the prices around 0.10-0.15 looked good. Now, at 0.01, it looks good going forward regardless of what happened in the past. Unfortunately, this had nothing to do with the company and everything to do with the game of politics. The company was probably fine. The deposits may have come back on their own after stability sets in and the capital controls were lifted (look at banks like Sberbank and Santander for examples of how deposits find the safest banks). The capitalization was probably sound. But the eurozone will not tolerate even the slightest chance of another financial system bailout and wanted to teach Greece a lesson...this is the end result. My cost basis is was probably around EUR 0.07 across all of my purchases which seemed like a steal relative to potential profitability, book value, etc. But of course, none of that matters if they dilute me at 0.01..... Kudos to those who foresaw such a harsh pricing environment. I would've though cooler heads would have prevailed but it looks like I was wrong on this one. Link to comment Share on other sites More sharing options...
MrB Posted November 18, 2015 Share Posted November 18, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Link to comment Share on other sites More sharing options...
MrB Posted November 19, 2015 Share Posted November 19, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? Link to comment Share on other sites More sharing options...
MrB Posted November 19, 2015 Share Posted November 19, 2015 Interestingly Alphabank issues new shares at 8% of current NAV/share (4/53) and Eurobank at half of that 4% (1/24) Link to comment Share on other sites More sharing options...
rijk Posted November 19, 2015 Share Posted November 19, 2015 with (pre reverse split) 200 billion new shares diluting 15 billion existing shares, can we count on market forces driving the current price much lower towards €0.01/share, resulting in p/tbv of 40%? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted November 19, 2015 Share Posted November 19, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though. The numbers are bad, but not as bad as if they issued 2B shares. Link to comment Share on other sites More sharing options...
MrB Posted November 19, 2015 Share Posted November 19, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though. The numbers are bad, but not as bad as if they issued 2B shares. Check the links below for context, but the first release says, "As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued." http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf Looks like 2Bn to me. Link to comment Share on other sites More sharing options...
MrB Posted November 19, 2015 Share Posted November 19, 2015 with (pre reverse split) 200 billion new shares diluting 15 billion existing shares, can we count on market forces driving the current price much lower towards €0.01/share, resulting in p/tbv of 40%? I don't know, but it is now recapitalized so on that basis it is unlikely. Having said that there should be selling pressure from FI guys. Link to comment Share on other sites More sharing options...
rijk Posted November 19, 2015 Share Posted November 19, 2015 at some point in the next few days/weeks, the price of the new 2 billion shares and the old 0.15 billion shares will merge will the price of the new shares rise 70% in a few days or will the price of the existing shares drop? Link to comment Share on other sites More sharing options...
muscleman Posted November 19, 2015 Share Posted November 19, 2015 What's the strike price for the CO bond? Are they trading in Athens exchange as well? Link to comment Share on other sites More sharing options...
MrB Posted November 19, 2015 Share Posted November 19, 2015 at some point in the next few days/weeks, the price of the new 2 billion shares and the old 0.15 billion shares will merge will the price of the new shares rise 70% in a few days or will the price of the existing shares drop? It has already happened, because the information is in the market. So the buyers at 0.01 can expect the shares to trade at the 0.016 shares are trading at today. However, the first time the new shares will trade it will be at EUR 1.60 using today's price as a guide (1/100 split ; see Eurobank website for exact timeline). Effectively Alpha & Eurobank prices today indicates you can expect the new shares to start trading at 50%-60% of book value, which is what is reflected in the market today and seems reasonable. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted November 19, 2015 Share Posted November 19, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though. The numbers are bad, but not as bad as if they issued 2B shares. Check the links below for context, but the first release says, "As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued." http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf Looks like 2Bn to me. You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals. It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!? Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money. Link to comment Share on other sites More sharing options...
constructive Posted November 19, 2015 Share Posted November 19, 2015 I wonder why they changed the plan. Was there a lack of demand for the converts, or did the government veto it for not raising enough straight equity? Link to comment Share on other sites More sharing options...
rijk Posted November 20, 2015 Share Posted November 20, 2015 It has already happened, because the information is in the market. So the buyers at 0.01 can expect the shares to trade at the 0.016 shares are trading at today. However, the first time the new shares will trade it will be at EUR 1.60 using today's price as a guide (1/100 split ; see Eurobank website for exact timeline). Effectively Alpha & Eurobank prices today indicates you can expect the new shares to start trading at 50%-60% of book value, which is what is reflected in the market today and seems reasonable. we will see in a few days, 2 billion new shares are not yet in the market, i would expect the price to converge somewhere between €0.01 and €0.016 there will be some selling from new investors that could potentially lock in 40-50-60% gains in a few days, and there are many of them..... Link to comment Share on other sites More sharing options...
MrB Posted November 20, 2015 Share Posted November 20, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though. The numbers are bad, but not as bad as if they issued 2B shares. Check the links below for context, but the first release says, "As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued." http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf Looks like 2Bn to me. You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals. It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!? Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money. I think it was always clear that in the case of Eurobank and in fact all the other banks they will try and raise as much private money as possible. The burden sharing/HFSF involvement was always pitched as the backup option. However, that does not mean I do not share your general sentiment. For one group to bring in less than 40% of the new equity and end up with more than 90% of the company (assuming the above maths is correct) is daylight robbery. I think what Fairfax, Brookfield & Ross have to consider is that one of the reasons people go into these deals with them is because they expect to be treated fairly. That brand equity has just been massively diluted if the following is correct. There could be a reason why Eurobank minorities stack up so poorly, but as far as I can tell your observation is correct, "WTF"!! Issue price/TBV Alpha Bank 8% Eurobank 4% NBG 2% Piraeus ?? Not priced yet as far as I know. Lastly, according to the NBG release your board of directors was supposed to look out for your interests. "The Board of Directors of NBG set the offer price at €0.02 per offered New Share or €0.30 following the 15-to-1 reverse share split, based on the results of the book-building process, following consultation with the Joint Global Coordinators of the Offering and with the consent of the General Council of the Hellenic Financial Stability Fund (HFSF)" Finally it has to be said that I don't know all the factors that weighed into the decision and I'm not sure the way I looked at it above is fair. However, looking at it from afar it seems to me minority shareholders have a reason to be miffed. Somewhat related article, coming up with slightly different numbers http://www.grreporter.info/en/greek_banks_shares_fall_below_1_cent/13595 Link to comment Share on other sites More sharing options...
MrB Posted November 20, 2015 Share Posted November 20, 2015 It has already happened, because the information is in the market. So the buyers at 0.01 can expect the shares to trade at the 0.016 shares are trading at today. However, the first time the new shares will trade it will be at EUR 1.60 using today's price as a guide (1/100 split ; see Eurobank website for exact timeline). Effectively Alpha & Eurobank prices today indicates you can expect the new shares to start trading at 50%-60% of book value, which is what is reflected in the market today and seems reasonable. we will see in a few days, 2 billion new shares are not yet in the market, i would expect the price to converge somewhere between €0.01 and €0.016 there will be some selling from new investors that could potentially lock in 40-50-60% gains in a few days, and there are many of them..... Ok I think I missed your point. Remember that most of those that get new shares asked for them. Except for the fixed income guys that were "bailed in". Some of them, perhaps a good chunk, could be forced to sell e.g. bond fund that is not allowed to hold equity. World Bank, EBRD, Fairfax consortium & other new shareholders make up 63% of new shares, which I guess include very few motivated sellers. "Old" shareholders make up 7% and LME 30%, where is where the motivated sellers will come from. P.S. Old and new shares will not trade simultaneously; see timetable for details. Traded down to 1.5 today, but also up to 1.7 Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted November 20, 2015 Share Posted November 20, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though. The numbers are bad, but not as bad as if they issued 2B shares. Check the links below for context, but the first release says, "As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued." http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf Looks like 2Bn to me. You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals. It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!? Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money. I think it was always clear that in the case of Eurobank and in fact all the other banks they will try and raise as much private money as possible. The burden sharing/HFSF involvement was always pitched as the backup option. However, that does not mean I do not share your general sentiment. For one group to bring in less than 40% of the new equity and end up with more than 90% of the company (assuming the above maths is correct) is daylight robbery. I think what Fairfax, Brookfield & Ross have to consider is that one of the reasons people go into these deals with them is because they expect to be treated fairly. That brand equity has just been massively diluted if the following is correct. There could be a reason why Eurobank minorities stack up so poorly, but as far as I can tell your observation is correct, "WTF"!! Issue price/TBV Alpha Bank 8% Eurobank 4% NBG 2% Piraeus ?? Not priced yet as far as I know. Lastly, according to the NBG release your board of directors was supposed to look out for your interests. "The Board of Directors of NBG set the offer price at €0.02 per offered New Share or €0.30 following the 15-to-1 reverse share split, based on the results of the book-building process, following consultation with the Joint Global Coordinators of the Offering and with the consent of the General Council of the Hellenic Financial Stability Fund (HFSF)" Finally it has to be said that I don't know all the factors that weighed into the decision and I'm not sure the way I looked at it above is fair. However, looking at it from afar it seems to me minority shareholders have a reason to be miffed. Somewhat related article, coming up with slightly different numbers http://www.grreporter.info/en/greek_banks_shares_fall_below_1_cent/13595 I don't blame Fairfax. It's their responsibility to look out for themselves and their shareholders and they did that. I blame Eurobank management. They're the ones beholden to the current shareholders. It was their management who decided to issue 100% equity as a massive discount despite the likely availability of cheaper financing alternatives. It was their management who decided to not make it available via a rights offering so retail investors could participate. It was their management that put out the misleading material suggesting that EUR 1.3B in convertible preferred shares was an intended cornerstone of the offering. It's just frustrating to see your "average shareholders" who stuck with you through all this bullshit to be treated like that by the management. Link to comment Share on other sites More sharing options...
MrB Posted November 20, 2015 Share Posted November 20, 2015 eurobank closing down 35% today, fairfax & ross existing investments of over half a billion euros have basically completely evaporated and they will still go ahead and invest nearly another half a billion??? https://www.google.com/finance?q=FRA%3AEFGC&ei=cLtMVrDINom5U6X7rdgP&ed=us Quick one. What is 28% of EUR 5,644m? Very rough maths here. Started trading today at around 0.016 So quick read on the maths, the existing 15Bn shares will become 150m shares after the 1/100 split and 2.038Bn new shares after split for a total of 2.189 new share total. According to page 11 of latest presentation (link below for today's updated one) TBV will go from EUR 3.5Bn to 5.644Bn. TBV/share then from 0.24 to 0.258 on a pre split basis. So on a pre split basis now trading 0.62x BV As far as the consortium goes, assuming they take up max shares, they now own at least 27.57% (old shares plus new shares; see page 10) or 603.6m shares for EUR 1.6Bn in TBV or EUR 0.965Bn in market value. http://www.eurobank.gr/Uploads/pdf/Presentation_TradingUpdate3Q2015_Updated.pdf Ultimately the old shareholders contributed 3.5Bn or 62% of the new TBV and will own 7% of the new TBV and the new shareholders contributed 38% of the new TBV and will own 93% of TBV. No?? They're not issuing 2B shares. They issued 1.3B in convertible notes (no idea what the conversion price is or the maturity yet). The remaining 700M was to be split between equity and CoCos - mostly equity though. The numbers are bad, but not as bad as if they issued 2B shares. Check the links below for context, but the first release says, "As a result, and subject to allocation of the New Shares, the share capital of Eurobank will be increased by €611,676,000 and an aggregate of 2,038,920,000 New Shares (following the reverse stock split), each having a nominal value of €0.30, will be issued." http://www.eurobank.gr/Uploads/pdf/18112015_EN.pdf http://www.eurobank.gr/Uploads/pdf/RevisedTimetable_AMK_EN.pdf Looks like 2Bn to me. You're right. It looks like it only took them two days to nix the EUR 1.3B in convertibles plus the CoCos they were supposed to have been approved to issue. It's not a big position for me, but it certainly makes me angry to see how small shareholders get shafted in these deals. It seems odd that just two days ago they were planning on sourcing the majority of the deal from Convertible debt and Cocos. They released updated presentation materials, voted on it at the shareholder meeting,etc. and 35% of the EUR 2B was supposed to come from a straight up equity issuance. Then, they nix all of that and issue the whole 100% in equity at a MASSIVE discount to the current share price. WTF?!?!? Institutional investors at least have the solace in knowing they can participate and get a 50% pop right off the back. The retail investors are the ones who get shafted - this recapitalization took place at our expense while everyone else has the ability to make themselves whole. Basically, they just squeezed the little guy out and took his money. I think it was always clear that in the case of Eurobank and in fact all the other banks they will try and raise as much private money as possible. The burden sharing/HFSF involvement was always pitched as the backup option. However, that does not mean I do not share your general sentiment. For one group to bring in less than 40% of the new equity and end up with more than 90% of the company (assuming the above maths is correct) is daylight robbery. I think what Fairfax, Brookfield & Ross have to consider is that one of the reasons people go into these deals with them is because they expect to be treated fairly. That brand equity has just been massively diluted if the following is correct. There could be a reason why Eurobank minorities stack up so poorly, but as far as I can tell your observation is correct, "WTF"!! Issue price/TBV Alpha Bank 8% Eurobank 4% NBG 2% Piraeus ?? Not priced yet as far as I know. Lastly, according to the NBG release your board of directors was supposed to look out for your interests. "The Board of Directors of NBG set the offer price at €0.02 per offered New Share or €0.30 following the 15-to-1 reverse share split, based on the results of the book-building process, following consultation with the Joint Global Coordinators of the Offering and with the consent of the General Council of the Hellenic Financial Stability Fund (HFSF)" Finally it has to be said that I don't know all the factors that weighed into the decision and I'm not sure the way I looked at it above is fair. However, looking at it from afar it seems to me minority shareholders have a reason to be miffed. Somewhat related article, coming up with slightly different numbers http://www.grreporter.info/en/greek_banks_shares_fall_below_1_cent/13595 I don't blame Fairfax. It's their responsibility to look out for themselves and their shareholders and they did that. I blame Eurobank management. They're the ones beholden to the current shareholders. It was their management who decided to issue 100% equity as a massive discount despite the likely availability of cheaper financing alternatives. It was their management who decided to not make it available via a rights offering so retail investors could participate. It was their management that put out the misleading material suggesting that EUR 1.3B in convertible preferred shares was an intended cornerstone of the offering. It's just frustrating to see your "average shareholders" who stuck with you through all this bullshit to be treated like that by the management. Not management - board of directors (see bold above) http://www.eurobank.gr/online/home/generic.aspx?id=1302&mid=1024&lang=en Chairman Non Executive Nikolaos V. Karamouzis Vice Chairman, Non-Executive Independent Director Spyros L. Lorentziadis Chief Executive Officer Fokion C. Karavias Deputy Chief Executive Officer Stavros E. Ioannou Deputy Chief Executive Officer Theodoros A. Kalantonis Non-Executive Directors Wade Sebastian R.E. Burton George K. Chryssikos Non-Executive Independent Directors Jon Steven B.G. Haick Bradley Paul L. Martin Stephen L. Johnson Non-Executive Director (1) Christina G. Andreou Non-Executive Director (2) Kenneth Howard Prince-Wright Secretary Harris V. Kokologiannis Link to comment Share on other sites More sharing options...
rijk Posted November 23, 2015 Share Posted November 23, 2015 anybody understands how 3.5 billion billion shares of nbg can trade at $0.26/share today when next week another 75 billion shares will be added at $0.02/share? Link to comment Share on other sites More sharing options...
rijk Posted November 24, 2015 Share Posted November 24, 2015 after hours, the price dropped back to below 20 cents, so probably over 100 million shares traded yesterday, causing a 50% increase in price, based on the erroneous assumption that new shares would be issued at 30 cents when in fact they are issued at 2 cents???? still a long way down to be somewhat in sink with the new issue price.... Link to comment Share on other sites More sharing options...
rijk Posted December 2, 2015 Share Posted December 2, 2015 recapitalized eurobank shares trading at €1.00 now, the equivalent of €0.01 pre recapitalization/reverse split tbv €2.58/share (5,644/2,186), this should be around 40% tbv, not bad for a fully recapitalized/stress tested bank http://www.helex.gr/stock-snapshot/-/select-stock/61 Link to comment Share on other sites More sharing options...
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