Metro Bank Rejects Takeover Approaches, Considers Equity Injection and Debt Restructuring
London-based lender Metro Bank has reportedly rejected a series of takeover approaches from specialist business lender Shawbrook. The bank is said to have held talks with bondholders about a potential equity injection alongside a debt restructuring.
According to media reports, Shawbrook made several takeover approaches to Metro Bank, including one in September. It is unclear if any ongoing discussions took place between the two companies, and the valuation of Shawbrook’s offers has not been established.
In light of the takeover rejections, bondholders have reportedly been in talks with Metro Bank about an equity injection by existing investors. This injection would be carried out alongside a debt restructuring. The proposal suggests extending the maturity of Metro Bank’s outstanding senior debt and converting the subordinated debt into equity. Shareholders would need to inject new equity to avoid severe dilution.
Reports indicate that a meeting between Metro Bank and bondholders aimed to discuss a refinancing package exceeding £500 million ($611.90 million). Specifically, Metro Bank’s £250 million tier 2 notes would be converted into equity, and the maturity of £350 million of senior bonds due in 2025 would be extended.
Metro Bank and Shawbrook declined to comment on the reports. Additionally, Metro Bank’s largest shareholder, Colombian billionaire Jaime Gilinski, did not respond immediately for comment.
To address its financial situation and reassure regulators, Metro Bank is set to discuss funding options with its shareholders over the weekend. The bank’s shares experienced a sharp drop on Thursday following reports that it was seeking to raise up to £600 million to strengthen its capital levels.
Shawbrook, a London-based specialist lender, serves real estate professionals, SMEs, and consumers. The lender has a loan book of £10.5 billion.
($1 = £0.8171)
Reporting by Juby Babu and Baranjot Kaur in Bengaluru; editing by Clelia Oziel and Franklin Paul