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Hellenic Bank secures €150M capital raise plan related to local bank takeover

Cypriot lender Hellenic Bank Public Co. Ltd. entered into an subscription agreement with Emma Alpha Holding Ltd., whereby the latter will subscribe for shares up to a total of €50 million, as part of the former's planned €150 million equity capital raise related to its purchase of certain assets and liabilities of Cyprus Cooperative Bank Ltd.

Hellenic Bank said it plans to improve its capital position after the acquisition, which was first disclosed in June, through a capital raise, of which about €100 million will be through a pre-emptive rights issue, and a private placement of nearly €50 million to Poppy Sarl, an entity owned by funds managed by Pacific Investment Management Co. LLC.

Emma Alpha, a wholly owned subsidiary of investment group EMMA CAPITAL Ltd., will subscribe for Hellenic Bank shares that are not subscribed for by the bank's shareholders in the rights issue, with the lender's board to have the final say on the number of shares to be subscribed by the former. Hellenic Bank will pay Emma Alpha a commission of 4.5% on the €50 million, regardless of whether it subscribes or not, with the entity's stake in the bank to range between zero percent and 17.3%, depending on the percentage of rights exercised.

Hellenic Bank has already entered into a subscription agreement with Demetra Investment Public Ltd. and agreed to allocate the local investment company additional shares necessary for it to have a total shareholding of not less than 20.1%, upon completion of the capital raise.

Hellenic Bank noted the capital raise is subject to shareholder approval at the lender's extraordinary general meeting Aug. 22.