Novo Banco SA's announced sale to U.S. private equity firm Lone Star Global Acquisitions Ltd is under threat from Pacific Investment Management Co. LLC and other bondholders in the Portuguese bank, who say they would rather acquire the lender themselves, The Wall Street Journal reported June 5.

Portugal's central bank agreed in April to sell a 75% stake in Novo Banco to Lone Star in exchange for a €1 billion capital injection. As part of the deal, senior bondholders are required to approve the conversion of €500 million worth of senior bonds into new, higher-risk notes as a way to boost the lender's capital.

However, Pimco and other bondholders are opposed to this condition and wrote to the central bank in late May to propose dropping the swap and selling Novo Banco to them instead, according to the Journal. Pimco, BlackRock Inc. and other international fund managers are also seeking an injunction against the sale to Lone Star, in order to recover approximately €1.5 billion of losses on the bank's bonds that were transferred out of Novo Banco at 2015-end.

Portugal is in talks with Pimco and BlackRock to settle the 2015 bond transfer, "people familiar with the matter" told the newspaper, adding that the letter could have been a ploy to secure a better deal in that matter. The bondholders, which are represented by PJT Partners, want to access Novo Banco's books to conduct due diligence ahead of a formal offer, and they say the Portuguese resolution fund should lose equity before losses are imposed on bondholders, the people added.