CBM has successfully closed a series of capital market transactions
In order to improve its capital structure and quality, CREDIT BANK OF MOSCOW (CBM) has made a series of interrelated financial market transactions. On 6 November 2019, CBM successfully completed an offering of its ordinary shares (SPO) raising RUB 14.7 bln in equity. The Bank used the proceeds to repurchase 150 mln US dollars in aggregate of its Eurobonds for further cancellation.
The Bank issued 2,750 mln shares through the SPO at RUB 5.35 per share, with a 3.9% discount to the closing price of the trading session on 5 November 2019 (RUB 5.565). 56.07% of all the offered shares was purchased by ROSSIUM Concern LLC, the Bank’s key shareholder. The rest was acquired by Russian and foreign institutional and private investors.
In parallel with the SPO, the Bank repurchased its U. S.$100 mln 7.5% subordinated Eurobonds due 2027 (CBOM-27) and U. S.$50 mln 8.875% perpetual bonds (CBOM-perp).
CBM redeemed some of the repurchased Eurobonds before term on 14 November 2019. Upon their partial redemption, 440 mln US dollars of CBOM-27 and 540 mln US dollars of CBOM-perp remain outstanding.
By replacing subordinated loans with shareholders’ equity, CBM will reduce its cost of capital by decreasing its interest expenses and increase substantially its regulatory capital adequacy ratios for further business growth.
CBM expects to report around 28 mln US dollars of gain from the cancellation of the repurchased Eurobonds in the 4Q2019 financial statements (net of the savings on coupon payments on their redeemed portion).
«The capital optimisation transactions (above all, the SPO) were very successful, partly because the Bank has been active in the capital markets for many years. We managed to improve the capital structure with good quality for further growth, and the resulting capital cushion will allow us to move confidently towards our goals. On top of that, our roadshow in London, New York, Tallinn, Stockholm, Paris and Frankfurt expanded notably the geography of our investor base and improved its diversification,» said Vladimir Chubar, Chairman of the Management Board.