Eurobank Ergasias SA agreed to sell 80% of its subsidiary Eurobank Financial Planning Services SA, as well as a portion of mezzanine and junior securitization notes of a €7.5 billion securitization of multi-asset nonperforming exposures to Italy's doValue SpA.
The Greek lender noted that the 80% stake has an enterprise value of €248 million, plus an earn-out of up to €40 million subject to fulfillment of specific financial key performance indicators over a 10-year period. Eurobank will continue to own a 20% stake in the subsidiary. The agreement values the loan recovery unit at €360 million.
As part of the transaction, Eurobank's troubled asset group will be transferred to Eurobank Financial Planning Services. The bank also signed a 10-year contract with the unit for the servicing of €5.6 billion of its nonperforming exposures and €5.7 billion of its retail early arrears, as well as any future NPEs and retail early arrears produced.
Eurobank Financial Planning Services will also manage the bank's €2 billion securitized portfolio of residential mortgage NPEs, the sold mezzanine and junior notes, and third party mandates from international investors reaching a total perimeter of about €26 billion.
Theodoros Kalantonis and Anastasios Panousis will be the executive chairman and CEO of the unit, respectively.
Additionally, Eurobank agreed to sell 20% of mezzanine notes and the minimum required percentage of junior notes for a cash consideration. Based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes, the implied valuation of the portfolio corresponds to 33.3% of its total gross book value.
The Greek bank will retain 5% of mezzanine and junior notes as well as 100% of senior notes, and will opt for the Hellenic Asset Protection Scheme, dubbed Project Hercules.
The transactions are expected to be completed by the end of the first quarter of 2020, subject to regulatory approvals. The deals are part of the accelerated NPE reduction plan announced in November 2018.