Dáil Éireann Debate, Wednesday - 28 April 2010
63 Deputy Jan O’Sullivan asked the Minister for Finance his plans to exercise or direct the managers of the National Pension Reserve Fund to exercise the warrants attached to the preference shares acquired by the fund in AIB and Bank of Ireland; the terms attached to these warrants; the extent to which these warrants are currently in money; and if he will make a statement on the matter. [17214/10]
View answerAs part of the 2009 Recapitalisation of AIB and Bank of Ireland, the State received an option ("Warrants") to purchase 25% of the existing ordinary shares in each bank (calculated on a post-dilution basis). As disclosed at the time, these warrants are exercisable by the State between the fifth and tenth anniversary of the issuance date of the 2009 Preference Stock.
On Monday 26th April, Bank of Ireland, announced a €3.4 billion capital raising exercise. As part of this transaction, the State has agreed to sell its warrants back to the bank for a net €491m in cash. This represents the profit generated on the investment over the past year. In the case of Allied Irish Banks, based on a current share price of €1.45 (closing price 27th April 2010) and the strike prices of €0.975 for the core tranche (equivalent to 15% of the existing ordinary shares) and €0.375 for the remaining warrants, these warrants are also significantly in the money.
As regards Allied Irish Banks, it is currently preparing a capital plan for the Financial Regulator. Once this plan is complete we will have a better indication of the capital raising options open to the bank. As I have outlined previously the State is willing to convert some or all of its Preference Shares, as required, on terms to be agreed that will provide full value for the taxpayer. Post receipt of this plan we will also be in a better position to assess if a buyback proposal for the warrants will be appropriate.
