A group of institutional investors has agreed to take Vestjysk Bank A/S out of state ownership and recapitalize the Danish lender.
The consortium of eight investors will pay 1 Danish krone per share for the 123,027,893 shares that the Danish government owns in Vestjysk Bank, corresponding to an 81.47% stake. It will also make the same offer to other shareholders.
After the offer is completed, the bank will launch an equity capital increase, open to all shareholders, for 745 million kroner. The investor group will guarantee the issuance, and shareholders who do not accept the voluntary buyout will be allowed to participate.
The injection of new equity will allow Vestjysk Bank to repay about 316 million kroner of Additional Tier 1 capital that was injected by the Danish government.
The investor group comprises Nykredit Realkredit A/S, which will invest between 125 million kroner and 178 million kroner and own 14% to 19.9% of the bank, depending on existing shareholder participation; Arbejdernes Landsbank A/S, which will put in between 100 million kroner and 175 million kroner for 11.2% to 19.4% of the bank; AP Pension Livsforsikringsaktieselskab, which will spend 150 million kroner to 165 million kroner and own 16.7% to 18.4% of the bank; C.L. David Foundation and Collection, which will invest 25 million kroner to 40 million kroner and end up with 2.8% to 4.4% of the bank; and ISP Pension, which will invest between 30 million kroner and 40 million kroner and own 3.3% to 4.5% of the bank.
In addition, Fondsmæglerselskabet Maj Invest A/S will invest 200 million kroner on behalf of its Danish clients, who will own an aggregate stake of 22.3%; Novo A/S will invest 75 million kroner and own 8.4% of the bank; and Vestjylland Forsikring gs. will invest 25 million kroner for 2.8% of the bank.
In addition, a number of Danish investors committed to invest around 325 million kroner in subordinated loan capital.
Vestjysk Bank said the investors are acting with a purely financial motive, and that none has any intention of combining Vestjysk Bank's activities with its own.
The investor group's voluntary offer and other elements of the plan are subject to the European Commission's reaching a decision on a pending state-aid case against Vestjysk Bank and that the decision "does not expose Vestjysk Bank to any significant negative impact." The EC launched a probe in December 2015, saying it had doubts over whether a restructuring plan presented after the injection of 8.94 billion kroner in state aid in 2012 would be sufficient to return the bank to long-term viability.
The Danish finance ministry's acceptance of the offer is conditional on the completion of the overall solution and on no other offer coming forward that would be financially more advantageous for the Danish state.
"In the present situation, the bank is challenged by low capitalization, but the overall solution will considerably strengthen its total capital," Vestjysk said. "After the implementation of the plan, Vestjysk Bank's surplus solvency is expected to be approximately 7 percentage points, against the 0.7 of a percentage point recorded in Vestjysk Bank's interim report for [the first quarter]."
As of June 9, US$1 was equivalent to 6.65 Danish kroner.