Credito Valtellinese SpA on Feb. 19 launched its €700 million cash call after the prospectus gained approval from market regulator Consob on Feb. 17.
Creval will issue up to 6,996,605,613 new ordinary shares, without nominal value, on a pre-emptive basis at a subscription price of 10 cents per share, of which 9 cents will be share premium. The new shares will have the same features as existing ones and will be offered at a ratio of 631 new shares for every 1 share held by investors. The maximum offer amount will reach roughly €699.7 million.
The capital hike will be fully guaranteed by a syndicate of Mediobanca, Banco Santander, Barclays, Citigroup Global Markets and Credit Suisse as co-global coordinators and joint book runners and Commerzbank and Société Générale as senior joint book runners. Banca Akros, Equita SIM and Keefe Bruyette & Woods will serve as joint book runners and MainFirst as co-lead manager.
Creval also entered into sub-underwriting agreements with Algebris (UK) Ltd., Credito Fondiario SpA and Dorotheum GmbH & Co KG to take up any unsold shares for up to €55 million. It also entered various other agreements with the three companies, the bank said Feb. 17.
Algebris (Milan branch) was granted a period of exclusivity over a portfolio of loans classified as unlikely to pay, and Creval said it will sell the portfolio to Algebris assuming receipt of a binding offer in line with agreed terms.
Subject to the full subscription of the capital increase, Credito Fondiario will be appointed master servicer of loans to be securitized as part of the bank's business plan, and it was also granted certain rights related to the acquisition of a further portfolio of bad loans.
Dorotheum, meanwhile, was granted a period of exclusivity over Creval's pawn business, as well as the right to match any offers should Creval opt to sell any of the properties related to that business.
At the end of the offer period, which runs through March 8, any unexercised pre-emptive rights will be offered on the Mercato Telematico Azionario. The pre-emptive rights will be tradable on the MTA from Feb. 19 to March 2.
The move is part of the Italian lender's bid to clean up its balance sheet, with proceeds to be used to get rid of bad loans that took up over one-fifth of total loans as of 2017-end, Reuters noted Feb. 19. The bank has said the effort is essential ahead of a merger it has called "inevitable," the report added.
Creval shares were down 6.4% in early trading Feb. 19, while rights in the capital increase were down 61%, Reuters said.