Metro Bank - News - Capital Package (inc. Liability Management)

Metro Bank Announces Successful Capital Package

09 OCTOBER 2023

Full announcement including disclaimers and offer restrictions available via Lonse

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"Details of the Capital Package

The Capital Package comprises three key elements: the Equity Raise, the new MREL Raise and the Debt Refinancing.

1) Equity Raise

· £150m firm placing at 30p per share, underpinned by equity commitments from a number of existing shareholders and new investors.

· To complete in Q4 2023, subject to shareholder approval.

· The Equity Raise has been led by Spaldy Investments Limited, Metro Bank's largest shareholder, which is contributing £102m. Spaldy Investments Limited will become the controlling shareholder of Metro Bank upon completion of the Transaction with a c.53% shareholding. Spaldy Investments Limited, a shareholder in Metro Bank since 2019, is run by Jaime Gilinski Bacal. As part of its investment, Spaldy Investments Limited will enter into a relationship agreement with Metro Bank governing its ongoing relationship in accordance with the Listing Rules.

· The Equity Raise includes a subscription by Daniel Frumkin, Chief Executive Officer at Metro Bank, of up to £2m. Under Listing Rule 11.1.10R, the participation in the Equity Raise by Daniel Frumkin constitutes a smaller related party transaction and as such does not require the approval of independent ordinary shareholders of the Company.

· The Equity Raise includes a subscription by James Hopkinson, Chief Financial Officer at Metro Bank, of up to £60,000.

· The shares will be issued at a price of 30 pence per share, which represents a discount to the current market price of the shares. This will result in the issued ordinary share capital of the Company increasing. Consequently, a holder of the shares will experience material dilution with respect to its relative ownership interest in the Company.

2) Debt Refinancing and Maturity Extension

· Liability management exercise via consent solicitation securing 100% support from bondholders identified and expected to reach 75% voting thresholds required for 100% noteholder participation in:

o A 40% haircut, rising to 45% if 75% (by value) of noteholders of the Tier 2 Instrument do not enter into lock-up agreements supporting the Debt Refinancing by 13 October 2023, on the existing £250m Metro Bank Tier 2 Instrument, combined with a 60% notional exchange into a new Holdings 10NC5 Tier 2 Instrument at a 14% coupon; and

o A 100% (falling to 95% % if 75% (by value) of noteholders of the MREL Senior Instrument do not enter into lock-up agreements supporting the Debt Refinancing by 13 October 2023) notional exchange on the existing £350m MREL Senior Instrument for a new MREL Senior Instrument at a 12% coupon.

· To complete in Q4 2023 subject to noteholder approval.

3) New MREL Raise

· £175m of new fixed-rate senior non-preferred notes in 6NC5 format with a coupon of 12% upsizing the senior MREL Instrument exchange and raised with the support of existing investors.

· To complete in Q4 2023, subject to noteholder approval.

The Equity Raise, new MREL Raise and Debt Refinancing are inter-conditional and are subject to shareholder, noteholder approval as well as a number of additional conditions. Shareholder approvals will include special and ordinary resolutions, together with an ordinary resolution of the independent shareholders (being those not participating in the Equity Raise) to approve a waiver of Rule 9 of the City Code on Takeovers and Mergers."

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"Timetable

· Publication of a prospectus and shareholder circular in the coming weeks.

· Launch of consent solicitation process in respect of the Debt Refinancing and documentation of the new MREL Raise in the coming weeks.

· Expected completion of the Capital Package in Q4 2023.

· Further announcements will be made in due course.

Conditions of the Capital Package

The Capital Package is subject to a number of conditions, which include:

· Interconditionality between the Equity Raise, new MREL Raise and the Debt Refinancing. Metro Bank has received commitments from shareholders for the Equity Raise and commitments from investors for the £175m MREL issuance; and expects to receive over 75% approval from debtholders for the debt refinancing (enabling 100% take-up of the debt refinancing);

· Shareholder approval of the Equity Raise (special and ordinary resolutions), including independent shareholder approval (ordinary resolution of independent shareholders) of a Rule 9 waiver for the purposes of the City Code on Takeovers and Mergers;

· Approval of the consent solicitations for the Debt Refinancing by the requisite majorities of the holders of the existing MREL Senior Instrument and Tier 2 Instrument. Note Metro Bank has received 100% support from noteholders identified and expects to achieve the 75% voting thresholds required for 100% noteholder participation (enabling 100% take-up of the debt refinancing);

· Formal PRA Change of Control approval for Spaldy Investments Limited having been received; and

· Formal PRA notifications and permissions having been made and granted, as applicable."

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