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Struggling Banco Indusval to raise capital, issue subordinated debt

Shareholders of Brazilian agricultural lender Banco Indusval SA on March 27 will vote on a proposal to raise the bank's capital by between 245.0 million reais and 325.5 million reais, according to a regulatory filing.

If approved, the plan will be carried out through the issuance of between 70 million and 93 million ordinary shares worth 3.50 reais each, the bank said.

The bank said the aim of the capital hike was to "strengthen the balance sheet of [Banco Indusval] and its subsidiaries in order to meet the requirements of Basel and, with this, to resume the capacity to generate new business and develop activities."

In addition, shareholders will also decide on the issuance of Tier-2 convertible subordinated debt instruments, which are meant to strengthen Indusval's capital base. Subject to the approval of Banco Central do Brasil, the notes, worth 55.0 million reais, will be convertible to shares at the price of 3.50 reais, the company said.

The proposals come as Banco Indusval has been plagued by negative capital ratio and years of losses. In 2018 a severe dip in its share price spurred a 1-for-10 reverse stock split.

As of March 11, US$1 was equivalent to 3.84 Brazilian reais.