REPORT ISSUED BY THE BOARD OF DIRECTORS OF CAIXABANK, S.A

Transcription

1 REPORT ISSUED BY THE BOARD OF DIRECTORS OF CAIXABANK, S.A. ON THE AMENDMENT TO CERTAIN TERMS AND CONDITIONS OF ISSUANCE OF THE SUBORDINATED BONDS MANDATORILY CONVERTIBLE INTO NEW SHARES AND/OR EXCHANGEABLE FOR EXISTING SHARES SERIES I/2012 1/8

2 I. SCOPE OF THIS REPORT This report concerns certain changes to the terms and conditions of issuance of the subordinated bonds mandatorily convertible and/or exchangeable into shares of CaixaBank, S.A. ( CaixaBank or the Company ) included in series I/2012 (the Bonds ) put forward to the Board of Directors for discussion at today s meeting. The issuance of the Bonds was documented on a deed executed before Mr. José Serna Masía, Notary Public in Barcelona, on 18 January 2012 under number 74 of his record and subsequently registered with the Barcelona Commercial Registry in book , folio 171, sheet B , entry 198 th. On 9 February 2012 a declaration of subscription, payment and closing of the issuance (acta de suscripción, desembolso y cierre de la emisión) was granted before the same Notary Public and registered with the Barcelona Commercial Registry in book , folio 195, sheet B , entry 210 th. The reports released by the Board of Directors and the independent expert under articles 414, 417 and 511 of Royal Legislative Decree 1/2010, of 2 July, enacting the Private Corporations (Consolidated) Act ( Private Corporations Act ), were made available to the shareholders as part of the call of the General Shareholders Meeting held on 19 April 2012 in accordance with article of the Private Corporations Act. The amendments to the terms and conditions of issuance are made on the basis of the power given to the Board of Directors of CaixaBank by the General Shareholders Meeting held on 12 May 2011 included in item 13 of the agenda. II. OVERVIEW OF THE CHANGES The changes are as follows: (i) (ii) (iii) (iv) replacement of the Event of Mandatory Partial Conversion and/or Exchange of Bonds (initially established at 30 June 2012) with an Event of Voluntary Partial Conversion and/or Exchange of the Bonds on 30 June 2012; introduction of an additional Event of Voluntary Partial Conversion and/or Exchange on 30 December 2012; deferral of the Last Date of Conversion/Exchange of the Bonds until 30 December 2015; introduction of an event of voluntary conversion and/or exchange exercisable on a half-yearly basis as from 1 January 2013 until 30 June 2015; and (v) increase of the annual rate of interest applicable to the Bonds Return by 0.5% from 1 July 2012 (i.e. from 6.5% to 7%). To facilitate market dealings, in the events of partial conversion and/or exchange, the reduction in the face value of the Bonds is replaced by the surrender of half the number of Bonds owned by Bondholders who carry out such voluntary partial conversions and/or exchanges. Capitalised terms not expressly defined in this report shall have the same meaning as in the securities note (nota de valores) as approved by and registered with the Spanish National Securities Exchange Commission on 26 December 2011 ( Securities Note ). III. BACKGROUND, RATIONALE AND IMPLICATIONS OF THE CHANGES To assist shareholders and bondholders to understand the changes outlined above, below there is a brief description of the background, rationale and implications of such changes: (i) Spain s current economical and financial climate is marked, inter alia, by extreme market volatility, which has a major impact on financial institutions and their interest 2/8

3 (ii) (iii) (iv) (v) (vi) groups. In this context, by relaxing the conversion and/or exchange of the Bonds and to the extent that the Bondholders so voluntarily decide, the foregoing changes might help mitigate potential factors of additional volatility that might impact negatively on the market value of the shares in the short and medium term, which is in the interest of the shareholders of the Company; through the introduction of Events of Voluntary Conversion and/or Exchange (Partial and Total) and by deferring the Last Date of Conversion / Exchange of the Bonds, Bondholders are given the chance to gradually convert and/or exchange their Bonds, thus spacing out shareholder dilution; as for the other arguments put forward to exclude the right of preemption by the shareholders, it is worth noting that: one of the reasons behind the issuance of Bonds was to optimise the Company s equity and that of its consolidated group of credit institutions. Bonds count as basic equity and core capital, as well as core tier 1 for the purposes of calculation of the above ratio by the European Banking Authority ( EBA ). The changes do not result in any alteration of the computability conditions mentioned and CaixaBank maintains ample solvency levels that comfortably exceed the regulatory requirements. Indeed, as at 31 March 2012 and on completing the provisions required by Royal Decree Law 2/2012, of 3 February on the restructuring of the financial industry, CaixaBank s core capital (Basel II) was 12.4%. Provisionally and because of the provisions required under Royal Decree Law 18/2012 of 11 May on restructuring and disposal of real estate assets owned by the finance sector, CaixaBank s core capital ratio (Basel II) would be 11.3%. The changes described above would result in a deferral of the targets in terms of an extended shareholder base and increased free float for the Company. However, it has to be noted that after the closing of the issuance of the Bonds, a potential integration of Banca Cívica, S.A. into CaixaBank was announced. The merger would involve placing CaixaBank shares on the market, which would also result in an the enlargement of its shareholder base and increased free float, which, in principle, should mean greater liquidity; also, as a result of the deferral of the Last Date of Conversion/Exchange of the Bonds, the Return on the Bonds is increased by an extra 0.5% nominal annual; without prejudice to the financial compensation resulting from a greater Return, these changes would have a neutral effect on Bondholders, as long as they would continue to be entitled to convert and/or exchange their bonds under the same terms and conditions and subject to the same deadlines as those originally specified in the issuance; and finally, these changes are put forward in a particularly complex market environment and with respect to Bonds whose mandatory partial conversion and/or exchange is expected to occur on 30 de June At present, there is no plan to extend those changes to other securities issued by the Company. Furthermore, the issuance of Bonds was exceptional, as it was linked to the offer of repurchase made to the holders of certain preferred securities who, in return, were offered a combination of products whose estimated market value at the time of the repurchase offer was greater than the market value of the preferred securities comprised in the repurchase but lower than the face value paid up (specifically, between 79.5% and 84%, as explained in the Securities Note). In accordance with the foregoing, it shall be deemed that the aforementioned amendments 3/8

4 are, as a whole, in the interest of both the shareholders and the Bondholders, and no substantial amendments of the Bonds essential valuation is made by virtue of said amendments. IV. PRESERVATION OF THE REMAINING TERMS AND CONDITIONS OF THE ISSUANCE The terms and conditions of the issuance will be amended only in those matters approved by the Board of Directors, briefly discussed above. All other matters included in the Securities Note will remain unchanged. Therefore, it shall be deemed as a non-extinctive amendment. In particular, it is explicitly stated that the Conversion and/or Exchange Value is euro. The Conversion and/or Exchange Value does not match the current market value of the Company s shares. However, in the period considered at the time of issuance it was consistent with the average market value. The Board of Directors has ruled out the possibility of adjusting this to current market conditions, as this is believed to be detrimental to the shareholders interest, taking into account too the fact that the right of preemption was excluded at the time of issuing the Bonds. Anti-dilution clauses are also preserved under the terms set forth in the Securities Note. However, it is appropriate to point out (as can be inferred from this report) that the solvency magnitudes and ratios contained in the issuance documents apply to la Caixa group, the consolidated group of credit institutions of which Caja de Ahorros y Pensiones de Barcelona ( la Caixa ) is the parent company and of which CaixaBank is a part. V. CONDITIONS PRECEDENT The effectiveness of the changes approved by the Board of Directors is subject to (i) confirmation by the Extraordinary Shareholders Meeting to be held on 26 June 2012, and (ii) the approval by the Assembly of Bondholders, to be called following a request to the Temporary Commissioner. VI. CONSOLIDATED TEXT OF THE BASES AND METHODS OF CONVERSION AND/OR EXCHANGE OF THE BONDS The resolution adopted by the Company s Board of Directors consists on amending certain bases and methods of conversion and/or exchange of the Bonds. Listed below are key, up-to-date particulars of the issuance, along with the consolidated text of the bases and methods of conversion and/or exchange of the Bonds, which includes the changes approved today by the Board of Directors. To the extent that the conditions precedent set forth in section V above are satisfied, such consolidated text will replace the bases and methods specified in the Board s report approved on 15 December 2011 made available to the shareholders before the General Meeting of Shareholders of CaixaBank held on 19 April First.- Particulars of the issuer The issuing company was CaixaBank, S.A., domiciled in Barcelona, Avenida Diagonal, 621, and holder of Tax Id. no. A Its current share capital is 3,840,103,475 euro, represented by 3,840,103,475 ordinary shares having a face value of 1 euro each, fully paid up and bearing identical rights. Second.- Value of the issuance The value of the issuance was 1,445,942,100 euro. Third.- Type of issuance and face value 4/8

5 The Bonds were issued at par value (at 100% of their face value). The face value of the Bonds is 100 euro, which is greater than the face value of the shares of the Company (i.e, 1 euro per share). The Bonds belong to one series only. All of them are subject to the same terms and conditions and therefore grant upon Bondholders identical rights. The Bonds are represented in book-entry form and recorded in the relevant accounting records maintained by the company responsible for the Management of Securities Registration, Clearance and Settlement Systems (Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A. Unipersonal, Iberclear) and authorised participating institutions. Fourth.- Rate of interest The rate of interest applicable to any return (if agreed by the Board of Directors, the Executive Committee or such other individual upon whom the Board may delegate its powers) payable on the face value of the Bonds until 30 June 2012 shall be a fixed annual rate of 6.5% payable on the face value of the Bonds at the time of payment. From 1 July 2012 until their redemption by conversion and/or exchange, such interest rate, if so resolved, shall be 7% nominal payable on the face value of the Bonds at the time of payment, payable also on a quarterly basis. For the purposes of determining the annual nominal interest rate, the term of the issuance shall be divided into successive return accrual periods. Fifth.- Last Date of Conversion/Exchange Any Bonds not previously converted and/or exchanged into shares must be mandatorily converted and/or exchanged into shares on 30 December 2015, subject to the procedure and events of conversion and/or exchange specified in the resolutions adopted by the Board of Directors on 15 December 2011 and at its meeting held today (the Last Date of Conversion/Exchange ). Sixth.- Incomplete subscription The issuance was restricted to the amount equivalent to the face value of the Bonds actually subscribed and paid up, that is to say, 1,445,942,100 euro. Seventh.- Bases and methods of conversion and/or exchange The Bonds are mandatorily convertible and/or exchangeable into Company shares, at such regular intervals and over the periods specified by the Board of Directors in its resolutions adopted on 15 December 2011 and at the meeting held today. The period may not exceed the Last Date of Conversion/Exchange contained in section 5 above. In particular, the issuance entitles Bondholders to voluntarily convert and /or exchange half of their Bonds on 30 June 2012 and 30 December 2012; and all of their Bonds every six months from 1 January 2013 to 30 June Likewise, Bonds shall be mandatorily converted and /or exchanged upon the occurrence of any of the Events of Mandatory Total Conversion and/or Exchange of Bonds, including the Last Date of Conversion / Exchange of the Bonds (30 December 2015) or the Event of Conversion and / or Exchange of the Bonds at the Bank s discretion. The conversion and/or exchange ratio of the Bonds shall be fixed throughout the life of the issuance. No adjustment to the conversion and/or exchange ratio shall be made because of fluctuations in the market value of CaixaBank shares. The value allocated to ordinary CaixaBank shares for conversion and/or exchange purposes is euro per share (the Price of Conversion and/or Exchange ). 5/8

6 For the purposes of the conversion and/or exchange ratio, under no circumstances may the share value may be lower than its face value (i.e. 1 euro per share). The number of shares to be allocated to each Bondholder as a result of the conversion and/or exchange shall therefore be the ratio resulting from dividing the face value of the Bonds at the relevant time by the Conversion and/or Exchange Value. If the operation yields fractions of a share, these shall be rounded down and paid by the Company in cash to the Bondholder. For these purposes, the shares shall be valued according to the Conversion and/or Exchange Value. Bondholders shall have the rights allocated to owners of ordinary Company stock from the date of registration in their own name of the shares in the appropriate accounting records. Bondholders are also entitled to anti-dilution protection under the circumstances and subject to the terms provided in article 418 of the Private Corporations Act and those laid down by the Board of Directors in its resolution passed on 15 December 2011 and shown in the Securities Note. It is hereby stated that the conversion and/or exchange of Bonds shall be carried out, at the discretion of CaixaBank, by issuing new shares or by allocating shares in circulation, pursuant to the terms and conditions stipulated in the resolution of issuance approved by the Board of Directors on 15 December Eighth.- Guarantees The Bonds are backed by the Company s unlimited patrimonial liability. Ninth.- Priority rules The Bonds are subordinated in nature and rank as follows: (a) behind all common and subordinated creditors of CaixaBank; (b) behind preferred securities, preferred stock or equivalent securities that CaixaBank may have issued (or guaranteed) or may issue (or guarantee) in the future or it may have taken over (or may take over in the future); (c) pari passu with Subordinated Convertible Bonds Series I/2011 of CaixaBank (at the time of issuance in May 2011, Criteria CaixaCorp, S.A.) and other issuances of debentures, bonds or other convertible and/or exchangeable securities equivalent to the Bonds that CaixaBank may have issued (or may issue in the future) either directly or via a subsidiary incorporating the CaixaBank guarantee or those that CaixaBank may have taken over (or may take over in the future); and (d) ahead of ordinary shares of CaixaBank. Tenth.- Date(s) of implementation of the issuance resolution The issuance of the Bonds was documented on a deed executed before Mr. José Serna Masía, Notary Public in Barcelona, on 18 January 2012 under number 74 of his record and subsequently registered with the Barcelona Commercial Registry in book , folio 171, sheet B , entre 198 th. On 9 February 2012 a declaration of subscription, payment and closing of the issuance (acta de suscripción, desembolso y cierre de la emisión) was granted before the same Notary Public and registered with the Barcelona Commercial Registry in book , folio 195, sheet B , entry 210 th. Eleventh.- Bondholders Syndicate Pursuant to articles 403 and 419 et seq of the Private Corporations Act, the Board of Directors set up a bondholders syndicate and approved the main rules applicable to the legal relationships between the Company and the syndicate. Twelfth.- Miscellaneous terms; delegation of powers The terms and conditions of issuance of the Bonds shall be those set forth in the Private Corporations Act, the Articles of Association of CaixaBank and the resolution passed by the 6/8

7 Company s General Meeting of Shareholders on 12 May 2011, under item 13 of the Agenda and, within the restrictions imposed therein, by the terms and conditions set forth by the Board of Directors in the resolution of issuance. Under the powers delegated by the General Shareholders Meeting held on 12 May 2011, the Board delegated upon the Executive Committee, Mr. Isidro Fainé Casas, Mr. Juan María Nin Génova, Mr. Antonio Massanell Lavilla, Mr. Tomás Muniesa Arantegui, Mr. Marcelino Armenter Vidal, Mr. Juan Antonio Alcaraz García, Mr. Gonzalo Gortázar Rotaeche, Mr. Alejandro García-Bragado Dalmau and Mr. Pablo Arturo Forero Calderón, jointly and severally, and in such broad terms as may be required by Law, the power to set the terms of the issuance in all matters not specifically covered by the resolution passed by the Board of Directors, including the power to amend such terms to bring them into line with the final conditions of the issuance and with the prevailing market situation at the time of commercialising the Bonds, as broad as allow by Law to execute such resolution. Thirteenth.- Audit report The Barcelona Commercial Registry appointed PricewaterhouseCoopers Auditores, S.L. as auditor (other than the auditor of the Company s financial statements) for the purposes of releasing a report on the exclusion of the right of preemption in regards to the issuance and on the bases and methods of conversion and/or exchange provided in the issuance resolution approved by the Board on 15 December 2011, pursuant to articles 417 and 511 (exclusion of the right of preemption) and 414 (bases and types of conversion and/or exchange of the Bonds) of the Private Corporations Act. On 17 May 2012 the Barcelona Commercial Registry appointed the same firm as independent expert, for the purposes of issuing a report to justify the bases and methods of conversion, taking into account the amendments of the terms and conditions of issuance of the Bonds under the terms of this report, and pursuant to section of the Private Corporations Act. This report, including the audit reports on the individual annual accounts of CaixaBank and the consolidated accounts of CaixaBank and its affiliates closed as at 31 December 2011, will be forwarded to the entity appointed by the Commercial Registry. This report and the report to be released by PricewaterhouseCoopers Auditores, S.L. on the changes to the issuance shall be made available to the Company s shareholders before the Extraordinary General Shareholders Meeting to be held on 26 June There are no material events for CaixaBank after 31 December 2011, other than events notified as such by CaixaBank to the Spanish National Securities Exchange Commission in compliance with article 82 of the Law 24/1988 of 28 July on the Securities Exchange or included as part of the public information disclosed regularly to the Commission. VII. CONCLUSIONS In view of the foregoing, the Board of Directors of the Company believes that the changes approved are (i) a non-extinctive amendment of the issuance of Bonds; and (ii) justified and fair in light of the Company s and its shareholders interests. * * * Barcelona, 22 May /8

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