Several activist investors, including U.S.-based Elliot Advisors, are interested in purchasing a stake in embattled British lender Metro Bank PLC after it was forced to pull a high-yield £200 million bond sale due to insufficient orders, The Times reported.
Metro founder and Chairman Vernon Hill is said to have met with potential backers to try to convince them to invest in the bank, The Telegraph wrote, citing sources. Hill, who is set to step down from his chairman role, is understood to have promised investors he will sort out the lender's problems.
The investors are eyeing a possible equity stake acquisition in the bank or buying new debt at a higher coupon rate in a private placement, according to The Times. Some firms are also considering purchasing the lender's deposit book as a way to tap cheap funding, while others will demand concessions, such as the departure of CEO Craig Donaldson, the report noted.
Metro Bank was seeking to raise between £200 million and £250 million from the issuance, but received orders for just £175 million despite offering a yield of 7.5% on the senior nonpreferred bonds. The result led to the bank's shares plummeting almost 27% in early-afternoon trading Sept. 24.
Metro Bank is expected to issue another bond, most likely after its third-quarter results in October and ahead of the Jan. 1, 2020 deadline for meeting its minimum regulatory capital requirement. A source told The Times that the Bank of England could push back the deadline.
