Confirmation of modifications to the Scheme

December 04, 2013

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM AUSTRALIA, NEW ZEALAND, SOUTH AFRICA, JAPAN, CANADA OR SWITZERLAND OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

4 December 2013

The Co-operative Group and The Co-operative Bank Liability Management Exercise - Confirmation of modifications to the Scheme and amendments to the indicative timetable for the Liability Management Exercise

On 4 November 2013, Co-operative Group Limited ("Co-operative Group" or the "Group") and The Co-operative Bank p.l.c. ("The Co-operative Bank" or the "Company") announced their revised Recapitalisation Plan for The Co-operative Bank, including the liability management exercise to be concluded this year (the "Liability Management Exercise").

Capitalised terms used and not otherwise defined in this announcement have the meanings given in the Consent and Exchange Offer Memorandum relating to the Liability Management Exercise (the "Consent and Exchange Offer Memorandum"), which is appended to and forms part of the respective Prospectuses published by Co-operative Group and The Co-operative Bank on 4 November 2013.

Confirmation of modifications to the Scheme

On 28 November 2013, the Company announced that it had been requested by certain members of an ad hoc group of holders of the Dated Notes (holding, in aggregate, approximately 48.3% of the Dated Notes by value) to apply to the High Court of Justice of England and Wales (the "Court") to seek leave to convene a meeting of holders of Dated Notes to consider and, if thought fit, approve the Scheme modified to take into account the amendments described in that announcement. On 2 December 2013, the Company announced that it had made the requested application to the Court. Following a Court hearing and adjourned hearing on 3 December 2013, on 4 December 2013 the Court granted leave to the Company to convene a meeting of holders of Dated Notes (the "Scheme Meeting") to consider and, if thought fit, approve the modified Scheme. The notice in respect of the Scheme Meeting is set out below.

Notice of Scheme Meeting

No. 7830 of 2013

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

IN THE MATTER OF THE CO-OPERATIVE BANK P.L.C.

and

IN THE MATTER OF THE COMPANIES ACT 2006

€34,980,000 Floating Rate Callable Step-up Dated Subordinated Notes due 2016 (ISIN: XS0254625998)

£37,775,000 5.875% Subordinated Callable Notes due 2019 (ISIN: XS0189539942)

£275,000,000 9.25% Subordinated Notes due April 2021 (ISIN: XS0620315902)

£8,747,000 Fixed/Floating Rate Subordinated Notes due November 2021  (ISIN: XS0274155984)

£235,402,000 7.875% Subordinated Notes due 2022 (ISIN: XS0864253868)

£200,000,000 5.75% Dated Callable Step-up Subordinated Notes due 2024 (ISIN: XS0188218183)

and

£150,000,000 5.875% Subordinated Notes due 2033 (ISIN: XS0145065602)

issued by the Company (together, the Dated Notes)

NOTICE IS HEREBY GIVEN that, by an order dated 4 December 2013 (varying an order made 18 November 2013) made in the above matter, the High Court of England and Wales (the Court) has directed that a meeting (the Scheme Meeting) be convened of the Scheme Creditors (as such term is defined in the scheme of arrangement hereinafter referred to) of The Co-operative Bank p.l.c. (the Company) for the purposes of considering and, if thought fit, approving (with or without modification, addition or condition approved or imposed by the Court and/or agreed by the Company) a scheme of arrangement proposed to be made between the Company and the Scheme Creditors (as amended on 4 December 2013, the Scheme).

The Scheme Meeting will be held at the offices of Allen & Overy LLP, One Bishops Square, London E1 6AD on 16 December 2013 commencing at 10 a.m. (London time).  All Scheme Creditors are requested to attend at such place and time either in person, by a duly authorised representative if a corporation, or by proxy.

A copy of the Scheme and a copy of the statement required to be furnished pursuant to section 897 of the Companies Act 2006 (as amended on 4 December 2013, the Explanatory Statement) are incorporated in the document of which this notice forms part. 

Scheme Creditors may vote in person or by a duly authorised representative if a corporation, at the Scheme Meeting or they may appoint another person, whether a Scheme Creditor or not, as their proxy to attend and vote in their place.  Scheme Creditors may appoint proxies to vote at the Scheme Meeting by filling out section 3 (Voting) of the Account Holder Letter (as defined in the Explanatory Statement).  If a Scheme Creditor is a corporation, it must appoint an authorised representative or proxy to vote on its behalf at the Scheme Meeting by filling out section 3 (Voting) of the Account Holder Letter in order to be entitled to vote at the Scheme Meeting.

To avoid double counting, each of the trustees and the common depositaries for the Dated Notes has confirmed in writing that it will not exercise any voting rights to which it may be entitled as a Scheme Creditor.

Each Scheme Creditor or its proxy will be required to register its attendance at the Scheme Meeting prior to the commencement of the Scheme Meeting.  Registration will commence at 8.00 a.m. (London time) on the date of the Scheme Meeting and each Scheme Creditor and proxy must be registered no later than one hour prior to the commencement of the meeting.  Each Scheme Creditor that is not a proxy must bring to the Scheme Meeting a copy of the relevant Account Holder Letter, evidence of corporate authority (in the case of a corporation) (for example, a valid power of attorney and/or board minutes) and evidence of personal identity (for example, a passport or other picture identification).  Each proxy must bring to the Scheme Meeting a copy of the Account Holder Letter authorising him or her to act as proxy on behalf of the Scheme Creditor and evidence of personal identity (for example, a passport or other picture identification).

In order to vote on the Scheme and attend the Scheme Meeting (in person, by a duly authorised representative if a corporation, or by proxy), Scheme Creditors must ensure that an Account Holder Letter is completed, delivered to and received by the Information Agent (as defined in the Explanatory Statement) (marked for the attention of Sunjeeve Patel / Yves Theis) in accordance with the instructions set out in the Account Holder Letter before 4.30 p.m. (London time) on 13 December 2013.  A copy of the form of Account Holder Letter may be downloaded from http://www.co-operative.coop/Bondholders (the Scheme Website). 

The Scheme, the Explanatory Statement and the Account Holder Letter will be available to download from the Scheme Website during the course of the afternoon on 4 December 2013 and thereafter.  A letter from the Company dated 4 December 2013 explaining the amendments to the Scheme, the Explanatory Statement and the Account Holder Letter from the versions uploaded to the Scheme Website on or around 18 November 2013 (the Amendment Letter) is being sent to Scheme Creditors via the Clearing Systems (as defined in the Explanatory Statement) on the date of this notice and is also available to download from the Scheme Website.  If a hard copy is required, please send your request to the Information Agent (marked for the attention of Sunjeeve Patel / Yves Theis).  By the order referred to above, the Court has appointed Niall Booker or, failing him, Alistair Asher or, failing him, Mark Sterling or another partner of Allen & Overy LLP to act as chairman of the Scheme Meeting and has directed the chairman to report the result of the Scheme Meeting to the Court.

Any Scheme Creditor on whose behalf a valid account holder letter for the purposes of the version of the Explanatory Statement which was uploaded to the Scheme Website on or around 18 November 2013 which includes a valid election to participate in the Additional New Ordinary Shares Offer and/or the Sub-purchasing Offer (as each such term was defined in that version of this Explanatory Statement) (any such account holder letter, an Old Account Holder Letter) has been delivered to and received by the Information Agent on or before the date of this notice should read carefully the changes to the Additional New Ordinary Shares Offer (as defined in the Explanatory Statement) described in the Amendment Letter (including the blackline of changed pages to the Explanatory Statement from the version uploaded to the Scheme Website on or around 18 November 2013). 

Any Old Account Holder Letter delivered to the Information Agent will have no effect.  However, if a valid Account Holder Letter is delivered to and received by the Information Agent before 4.30 pm (London time) on 13 December 2013 in respect of a Scheme Creditor on whose behalf an Old Account Holder Letter has, prior to the delivery of that Account Holder Letter, been delivered to and received by the Information Agent (and not revoked), that Account Holder Letter will be deemed to have been received by the Information Agent on the date and at the time that the Old Account Holder Letter was received by the Information Agent.

The Scheme will be subject to the subsequent approval of the Court.

For further information in this regard, please contact the Information Agent using the following contact details:

Lucid Issuer Services Limited

Leroy House

436 Essex Road

London

N1 3QP

Attention: Sunjeeve Patel / Yves Theis

Telephone: +44 20 7704 0880

Email: co-op@lucid-is.com

Facsimile: +44 20 7067 9098

Dated 4 December 2013

The Co-operative Bank p.l.c.

Table of Scheme Consideration

The table below shows the Scheme Consideration to which holders of the Dated Notes will be entitled under the terms of the Scheme and the Modified Scheme, taking into account the change in the Record Date under the Modified Scheme to 13 December 2013.

 

Existing Securities ISIN

Consideration Amount1

(per £1,000 of Scheme Claim4




New Ordinary Shares

Conversion Price




Bank T2 Notes2
New Ordinary Shares3
Scheme Modified Scheme Scheme   Modified Scheme Scheme   Modified Scheme
Floating Rate Callable Step-up Dated Subordinated Notes due 2016 XS0254625998 £102.63 £102.57 £897.37 £897.43

 

 

 

£7.7718276 per share

 

 

 

£6.17566631 per share

 

5.875% Subordinated Callable Notes due 2019 XS0189539942 £102.63 £102.57 £897.37 £897.43
9.25% Subordinated Notes due 28 April 2021 XS0620315902 £102.63 £102.57 £897.37 £897.43
Fixed/Floating Rate Subordinated Notes due November 2021 XS0274155984 £102.63 £102.57 £897.37 £897.43
7.875% Subordinated Notes due 19 December 2022 XS0864253868 £102.63 £102.57 £897.37 £897.43
5.75% Dated Callable Step-up Subordinated Notes due 2024 XS0188218183    £102.63 £102.57 £897.37 £897.43
5.875% Subordinated Notes due 2033 XS0145065602  £102.63 £102.57 £897.37 £897.43

   

Notes:

  1. New sterling-denominated 11 per cent. Subordinated Notes due 2023 (ISIN: GB00BFXW0853) to be issued by the Bank.
  2. New ordinary shares to be issued by the Bank. If the Liability Management Exercise is successfully completed, Co-operative Group's existing equity stake in the Bank will be converted into deferred shares and effectively reduced to nil and a total of 250,000,000 new ordinary shares will be issued at that time, of which:
    (i)   75,000,000 (representing 30 per cent. of the total) will be issued to Co-operative Group in consideration for its fresh injection of capital into the Bank through the Liability Management Exercise and the 2014 Commitment (representing an effective subscription price of £6.16 per share);
    (ii)  141,666,666 (representing 56.67 per cent. of the total) will be issued to holders of the Dated Notes in the Scheme in exchange for their Dated Notes, to be distributed in the Modified Scheme pro rata amongst such holders based on their respective Scheme Claims (representing, based on the total value of Scheme Claims and the number of New Ordinary Shares issued in the Modified Scheme to holders of Dated Notes, an implied subscription price equal to the New Ordinary Shares Conversion Price). The New Ordinary Shares referred to in the table above are these 141,666,666 new ordinary shares; and
    (iii) 33,333,334 (representing the balance of 13.33 per cent. of the total) will be available for subscription by holders of Dated Notes pursuant to, and on the terms of, the Modified Scheme for an aggregate consideration equal to £125,000,002.50 (representing an effective subscription price of £3.75 per share).
  3. A Holder's claim in the Modified Scheme (its Scheme Claim) will be equal to the sum of (i) the aggregate principal amount outstanding of such Holder's Dated Notes and (ii) the accrued and unpaid interest on such Dated Notes up to (and including) the Scheme Record Date (13 December 2013), provided that a Holder's Scheme Claim in respect of Floating Rate Callable Step-up Dated Subordinated Notes due 2016 (ISIN: XS0254625998) (which are denominated in euro) shall be the Sterling-Equivalent of such sum, calculated on the basis of an exchange rate of £0.85644 per €1.00.

Changes to the indicative timetable for the Liability Management Exercise

As a result of certain changes to the Scheme timetable in connection with the modifications to the Scheme, the indicative timetable for the Liability Management Exercise is being revised as set out below. As set out in the table below, the expected Settlement Date for the Liability Management Exercise is 20 December 2013.

Scheme Events

 

Dates and Times
(all times are London time)

 

Offer Events

 


4.30 p.m. on
6 December 2013

Expiration Deadline



Deadline for receipt of all Exchange Instructions from Eligible Holders in respect of Preference Shares, 13% Bonds and 5.5555% Bonds.


11 December 2013

 

 

 

 

 

 

 

 

 

 

 

11 December 2013

 

Meetings

Meetings of the Holders of the Preference Shares, 13% Bonds and 5.5555% Bonds held to consider the Extraordinary Resolutions pursuant to the Proposals.

1.00 p.m. in respect of the Preference Shares.

2.00 p.m. in respect of the 13% Bonds.

3.00 p.m. in respect of the 5.5555% Bonds.

Offer Record Date

The record date for the purposes of ceasing trading in the Preference Shares, 13% Bonds and 5.5555% Bonds, and for determining entitlement to receive the relevant Group Notes, Bank T2 Notes, Accrued Dividends, Accrued Interest and other amounts payable under the terms of the Liability Management Exercise (if successfully completed).

Voting Instructions Deadline

4.30 p.m. on
13 December 2013


Deadline for receipt of all Account Holder Letters containing voting instructions in order for Holders to vote on the Scheme, elections to subscribe for Additional New Ordinary Shares pursuant to the Additional New Ordinary Shares Offer in the Scheme, elections to participate in the Sub-purchase Offer and confirming eligibility to receive Scheme Consideration under the Scheme on the Scheme Settlement Date.



Scheme Record Date

13 December 2013


Only those Holders who are Scheme Creditors as at the Scheme Record Date are entitled to attend and vote at the Scheme Meeting (unless the Co-operative Bank, in its sole discretion, elects to recognise, for the purposes of the Scheme, a transfer of Dated Notes after the Scheme Record Date such that the transferee becomes a Scheme Creditor).



 

Scheme Meeting

16 December 2013


 

Meeting of the Scheme Creditors to vote on the Scheme.

The Court has ordered the Co-operative Bank  to convene the Scheme Meeting on 16 December 2013.



 

Notification of allocation of Additional New Ordinary Shares and Sub-purchasing Commitments

 

On or around 16  December 2013


 

Results Announcement

On or around
16 December 2013

Results Announcement

 

Announcement of the results of the Liability Management Exercise


Announcement of the results of the Liability Management Exercise.

 

Scheme Sanction Hearing

18 December 2013


 

Second Court hearing for sanction of the Scheme by the Court. The Co-operative Bank will announce as soon as reasonably practicable after the Scheme Sanction Hearing whether or not the Scheme is sanctioned.



 

Filing of sanction order

The date of the Scheme Sanction Hearing or the following business day


 

Sanction order (if granted) delivered to the Registrar of Companies. Scheme becomes effective in accordance with its terms.



 

Settlement Date /Scheme Settlement Date

20 December 2013

Settlement Date/ Scheme Settlement Date

 

Expected settlement of the Scheme (subject to satisfaction of the Settlement Condition), including issue and delivery of New Ordinary Shares, Bank T2 Notes and Additional New Ordinary Shares.


Expected settlement of the Offers (subject to satisfaction of the Settlement Condition), including issue and delivery of Bank T2 Notes and Group Notes and payment of Accrued Dividends, Accrued Interest and other relevant amounts.

Publication of supplementary prospectuses

Co-operative Group and The Co-operative Bank intend shortly to publish supplements to their respective Prospectuses dated 4 November 2013.  The supplementary prospectuses will, amongst other things, reflect the modifications to the Scheme (where relevant) and the changes to the indicative timetable.

Media enquiries

The Co-operative Group:                                  Tulchan Communications:

Russ Brady - 07880 784442                             Susanna Voyle and Jonathan Sibun

020 7353 4200

------------

Investor enquiries:

The Co-operative Bank:

0800 7312310

http://www.co-operative.coop/Bondholders/

------------

Disclaimers

Neither this announcement, the publication in which it is contained nor any copy of it may be taken, transmitted or distributed, directly or indirectly, into Australia, New Zealand, South Africa, Japan, Canada or Switzerland or any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of securities law in those jurisdictions.  The distribution of this document in other jurisdictions may also be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any shares or any other securities nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefore. The availability of the transactions described herein and the distribution of this announcement in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

In particular, this announcement does not constitute an offer for sale of, or a solicitation to purchase or subscribe for, any securities in the United States. No securities of the Group or the Company have been, or will be, registered under the US Securities Act of 1933, as amended (the "Securities Act"), and securities of the Group or the Company may not be offered or sold in the United States absent an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. The Group and the Company securities will be offered by means of a prospectus or Scheme document that may be obtained from the Company and/or the Group, as applicable.

This announcement is an advertisement and not a prospectus. Investors should not make any investment decision regarding any securities referred to in this announcement or in the Liability Management Exercise except on the basis of information contained in the prospectuses (as supplemented) and Consent and Exchange Offer Memorandum published by the Group and the Company and the Scheme documents made available by the Company. The Group and the Company expressly reserve the right to adjust or amend the terms of the Liability Management Exercise and the securities.

HSBC Bank plc ("HSBC") has been appointed as a dealer manager by the Company and The Group  to facilitate the Liability Management Exercise and as adviser to the Company in connection with the LME. HSBC is authorised and regulated by the PRA and the FCA and is acting exclusively for the Company (in its capacity as a dealer manager and adviser) and The Group (in its capacity as a dealer manager) in connection with the Liability Management Exercise and will not regard any other person (whether or not a recipient of this announcement or a holder of the Company's securities) as a client in relation to the Liability Management Exercise E and will not be responsible to anyone other than the Company and The Group for providing the protections afforded to its clients or for providing advice in the relation to the Liability Management Exercise or any other matter referred to in this announcement.

UBS Limited ("UBS") has been appointed as a dealer manager by the Company and The Group to facilitate the Liability Management Exercise and as adviser to The Group in connection with the Liability Management Exercise. UBS is authorised and regulated by the PRA and the FCA and is acting exclusively for the Company (in its capacity as a dealer manager) and The Group (in its capacity as a dealer manager and adviser) in connection with the Liability Management Exercise  and will not regard any other person (whether or not a recipient of this announcement or a holder of the Company's securities) as a client in relation to the Liability Management Exercise and will not be responsible to anyone other than and The Group for providing the protections afforded to its clients or for providing advice in the relation to the Liability Management Exercise or any other matter referred to in this announcement.

This announcement has been issued by and is the sole responsibility of the Company and The Group. Neither HSBC nor UBS accepts any responsibility whatsoever for, or makes any representation or warranty, express or implied, as to the contents of this announcement or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Group or the Liability Management Exercise and nothing in this announcement may be relied upon as a promise or representation in this respect, whether or not in the past or future. Subject to applicable law, each of HSBC and UBS accordingly disclaims all and any responsibility or liability, whether arising in tort, contract or otherwise, which it might otherwise have in respect of this announcement or any such statement.