AIB- Proposed Participation in NAMA
(Thomson Reuters ONE) - Embargo 07.00 30th November 2009AIB - Proposed participation in the National Asset Management Agency bank asset acquisition programmeAllied Irish Banks, p.l.c. ("AIB") [NYSE: AIB] ("AIB" or the"Company") today announces its intention to participate in theNational Asset Management Agency ("NAMA") bank asset acquisitionprogramme in Ireland (the "NAMA Programme"). Participation in theNAMA Programme is subject to approval by shareholders at anExtraordinary General Meeting to be held at 11.00 a.m. on 23 December2009. This will be done by an ordinary resolution and a vote infavour by shareholders would authorise the Company to proceed withthe participation in the NAMA Programme on the terms contained in theNAMA Act.Highlights* Under the NAMA Programme, NAMA will acquire "eligible bank assets" (the "NAMA Assets") from AIB, which will include performing and non-performing loans. NAMA has not yet identified which of AIB's loans it intends to acquire under the NAMA Programme. AIB estimates that NAMA will acquire from AIB land and development loans and certain associated loans with an aggregate value of approximately ?¬24.2 billion on a gross loan basis (i.e. before taking account of ?2.3 billion of loan loss provisions as at 30 June 2009), based on assumptions outlined in the shareholder circular being posted to shareholders of the Company today (the "Circular") and set out at the end of this announcement (the "Assumptions").* The NAMA Assets will be valued on a loan-by-loan basis, using the valuation methodology specified in the National Asset Management Act 2009 and in the associated regulations. The Minister for Finance has provided guidance that an average industry discount of 30 per cent. to the gross value of the NAMA Assets has been estimated, although there can be no assurance that this will be the case. In the Board's view, there is no reason to believe that the average discount applicable to AIB's NAMA Assets will fall significantly outside of this guidance.* The consideration for the NAMA Assets to be acquired by NAMA from AIB will comprise the issue to AIB of bonds and subordinated bonds equal in value to the purchase price of those assets. The Company intends to retain the bonds and subordinated bonds and use them as a source of further liquidity to support its business activities. It is expected that the acquisition by NAMA of all of the NAMA Assets from all of the participating institutions will be completed by July 2010 with the first tranche expected to transfer in January 2010.* Participation in the NAMA Programme will enable AIB to sell certain land and development loans and associated loans to NAMA and thereby determine the Group's losses associated with those loans. It is expected that this will increase market certainty because the NAMA Assets in general are perceived to carry a higher risk than other classes of assets on the Group's balance sheet.* The Board believes that participation by AIB in the NAMA Programme will underpin market confidence in AIB by removing a key element of uncertainty and will generate the following benefits: (i) it should enable AIB to gain greater access to wholesale funding as counterparties become more comfortable with the Company's risk profile; (ii) it should improve customer confidence in AIB and should support the Company overall in building a larger more stable deposit base; and (iii) it should enhance the Company's ability, should it so decide, to access capital, pursue the Company's strategy and improve the resilience of the Group's balance sheet.* Based on the Assumptions, AIB has estimated that, on a pro forma basis as at 30 June 2009, participation in the NAMA Programme would have reduced its core tier 1 capital ratio from 8.5 per cent. to 6.3 per cent., its tier 1 capital ratio from 7.8 per cent. to 6.1 per cent. and its total capital ratio from 10.7 per cent. to 9.5 per cent.* The NAMA Act is structured to require a participant that wishes to apply to join the NAMA Programme to do so at a point when it will not have certainty on: (i) precisely which of its NAMA Assets will be acquired by NAMA; (ii) the number of its assets to be acquired by NAMA; (iii) the price at which its NAMA Assets will be acquired by NAMA; and (iv) the timing of the transfer of its NAMA Assets to NAMA.* The Board believes, if the resolution to authorise participation in the NAMA Participation is not approved by Shareholders, it would not be possible to put in place the necessary levels of capital that would be expected by the market or funding commitments in an acceptable time period to support and reinforce confidence in AIB and, therefore, there is a very significant risk that AIB will have to rely, to a greater extent, on Government support to sustain its business. The terms of this support are likely to result in partial or full nationalisation of AIB.Expected TimetableLatest time and date for receipt of Forms of Proxy 11.00 a.m. on 21for the Extraordinary General Meeting December 2009Extraordinary General Meeting 11.00 a.m. on 23 December 2009Expected date of completion of the transactions by July 2010constituting participation in the NAMA Programme(1)Note:(1) It is expected that NAMA Assets will be transferred toNAMA in a series of transfers. The expected completion date indicatedabove refers to the transfer of the last of the NAMA Assets to NAMA,as indicated by the NAMA draft business plan dated 13 October 2009.Extraordinary General MeetingAn Extraordinary General Meeting is being convened by the EGM Noticeset out at the end of the Circular to consider and, if thought fit,pass the resolutions. The Extraordinary General Meeting will takeplace at 11.00 a.m. on 23 December 2009 in Bankcentre, Ballsbridge,Dublin 4.Two resolutions will be proposed at the Extraordinary GeneralMeeting. The first resolution will be proposed as an ordinaryresolution and concerns the approval required to enable AIB toparticipate in the NAMA Programme. The second resolution, which willbe proposed as a special resolution, is not related to participationin the NAMA Programme and will, if approved, enable the Company toconvene certain meetings of Shareholders on 14 days' notice.Due to the size of the transaction relative to AIB's marketcapitalisation, participation in the NAMA Programme constitutes a"Class 1 transaction" under the Listing Rules of the Irish StockExchange and the Listing Rules made by the UK FSA under Part VI ofthe Financial Services and Markets Act 2000 of the United Kingdom, asamended, (the "Listing Rules"). In addition, participation in theNAMA Programme is treated as a "related party transaction" under theListing Rules. As a consequence, the Listing Rules require thatparticipation in the NAMA Programme may only be implemented if it isapproved by the Company's shareholders. The National Pensions ReserveFund Commission, which is regarded as an "associate" of the Ministerfor Finance under the Listing Rules and which holds ordinary sharesin the Company, has undertaken not to vote on the resolutionregarding NAMA and to take all reasonable steps to ensure that itsassociates (if any) will not vote on that resolution.DocumentationThe Circular, including the EGM Notice convening an ExtraordinaryGeneral Meeting of AIB to be held at 11.00 a.m. on 23 December 2009at Bankcentre, Ballsbridge, Dublin 4, will be posted to shareholderstoday.A copy of the Circular will shortly be available to download from theCompany's website: www.aib.ie/investorrelations.A copy of the Circular will also shortly be available for inspectionat the following locations:1. Allied Irish Banks, p.l.c.BankcentreBallsbridgeDublin 4IrelandTel.: +353 1 660 03112. Company's Announcement OfficeIrish Stock Exchange28 Anglesea StreetDublin 2IrelandTel.: +353 1 617 42003. Financial Services Authority25 The North ColonnadeCanary WharfLondonE14 5HSUnited KingdomTel.: +44 207 066 10004. McCann FitzGeraldRiverside OneSir John Rogerson's QuayDublin 2Ireland5. Linklaters LLPOne Silk StreetLondonEC2Y 8HQUnited KingdomEnquiriesFor further information, please contact:Alan Kelly Catherine BurkeGeneral Manager, Group Finance Head of Corporate RelationsAIB Group AIB GroupDublin 4 Dublin 4Tel: +353-1-641 2162 Tel: +353-1-641 3894This is not a circular or an equivalent document. Please read thewhole of the Circular, in particular the risk factors set out in theCircular. You should not rely on any key or summarised information asset out in this announcement.This announcement does not constitute or form part of any offer orinvitation to purchase, otherwise acquire, subscribe for, sell,otherwise dispose of or issue, or any solicitation of any offer tosell, otherwise dispose of, issue, purchase, otherwise acquire orsubscribe for, any security. The contents of this announcement shouldnot be construed as legal, business, financial, tax, investment orother professional advice.Morgan Stanley & Co. Limited ("Morgan Stanley") is acting as sponsorand financial adviser and AIB Corporate Finance Limited ("AIBCorporate Finance") is acting as financial adviser to AIB in relationto participation in the NAMA Programme. Morgan Stanley and AIBCorporate Finance are acting exclusively for AIB and no one else inconnection with participation in the NAMA Programme and will notregard any other person (whether or not a recipient of the Circular)as their respective client in relation to participation in the NAMAProgramme and will not be responsible to anyone other than AIB forproviding the protections afforded to their respective clients or forproviding advice in relation to participation in the NAMA Programmeor any other matter referred to in this announcement. In particular,the advice of Morgan Stanley referred to on page 19 of the Circularhas been delivered to the Directors for the purposes of theirobligations under the Listing Rules. It has not been delivered forthe benefit of anyone else, including any shareholder of AIB, and itis not to be relied on by anyone other than the Directors for anypurpose whatsoever.Apart from the responsibilities and liabilities, if any, which may beimposed on Morgan Stanley by the Listing Rules, neither MorganStanley nor AIB Corporate Finance accepts any responsibilitywhatsoever and makes no representation or warranty, express orimplied, for the contents of this announcement or the Circular,including its accuracy, completeness or verification or for any otherstatement made or purported to be made by AIB, or on AIB's behalf orby Morgan Stanley or AIB Corporate Finance, or on Morgan Stanley's orAIB Corporate Finance's behalf, in connection with AIB orparticipation in the NAMA Programme, and nothing in this announcementis or shall be relied upon as a promise or representation in thisrespect, whether as to the past or future. Each of Morgan Stanley andAIB Corporate Finance accordingly disclaims to the fullest extentpermitted by law and under the Listing Rules all and anyresponsibility and liability, whether arising in tort, contract orotherwise, which it might otherwise have in respect of the Circularor this announcement and any such statement.This announcement contains "forward-looking statements", within themeaning of Section 27A of the US Securities Act of 1933, as amended,and Section 21E of the US Exchange Act of 1934, as amended, regardingthe belief or current expectations of AIB, AIB's Directors and othermembers of its senior management about AIB's businesses and thetransactions described in this announcement, including statementsrelating to possible future write-downs or impairments. Generally,words such as "may", "could", "will", "expect", "intend", "estimate","anticipate", "believe", "plan", "seek", "continue" or similarexpressions identify forward-looking statements.These forward-looking statements are not guarantees of futureperformance. Rather, they are based on current views and assumptionsand involve known and unknown risks, uncertainties and other factors,many of which are outside the control of AIB and are difficult topredict, that may cause actual results to differ materially from anyfuture results or developments expressed or implied from theforward-looking statements. Factors that could cause actual resultsto differ materially from those contemplated by the forward-lookingstatements include, among other factors: developments in the currentcrisis in global financial markets; the ability of AIB to accesssources of liquidity; the risk that AIB may have insufficient capitalresources to meet the minimum required by regulators; the possibilityof AIB requiring further goodwill impairments; the risk thatfinancial models determining the value of certain financialinstruments may change over time or turn out to be inaccurate and thevalue realised by AIB for its assets may be materially different fromthe current or estimated value; the financial stability of otherfinancial institutions, including AIB's counterparties; themanagement of AIB's capital; the policies of various governmental andregulatory authorities; limitations or additional requirementsimposed on AIB's activities as a result of participation in the NAMAProgramme, the CIFS Scheme, the ELG Scheme and the NPRFC Investment(each as defined in the Circular); the risk that governmentalliability guarantee schemes may be revoked or changed; the creditratings assigned to AIB by rating agencies; the risk that AIB may notparticipate in the NAMA Programme or that the NAMA Programme may turnout to be unsuccessful in achieving its goals; the risk that AIB'sapplication to participate in the NAMA Programme may not besuccessful; if AIB participates in the NAMA Programme, the lack ofcontrol AIB will have over the nature, number and valuation of theassets to be transferred to NAMA and the timing for the transfer ofthose assets to NAMA; the risk that the value of associated loansthat NAMA acquires from AIB could be greater than the valueattributed to them in the Assumptions (as defined below); the outcomeof EU state aid clearances and reviews; the undertakings made by, andrestrictions placed on, AIB once an application has been made by itto participate in the NAMA Programme; the risk that AIB may berequired to indemnify NAMA in respect of various matters; thedirections the Financial Services Regulatory Authority, as part ofthe Central Bank and Financial Services Authority of Ireland (the"Financial Regulator") may give in relation to AIB's future conduct;the risk that the Minister for Finance may direct the Company toimplement a restructuring plan and/or a business plan in relation toAIB's future conduct; the Company being required to provide suchservices in respect of NAMA Assets as NAMA requests; compliance withany guidelines issued by the Minister for Finance regarding lendingpractices; and the risk that AIB may not recover the full value ofthe subordinated NAMA bonds and that the Government may impose asurcharge on the Company's profits.No statement in this announcement is intended to constitute a profitforecast or profit estimate for any period. The forward-lookingstatements speak only as of the date of this announcement. Except asrequired by the Financial Regulator, the Irish Stock Exchange, theFSA, the London Stock Exchange plc or applicable law, AIB does nothave any obligation to update or revise publicly any forward-lookingstatement, whether as a result of new information, further events orotherwise. AIB expressly disclaims any obligation or undertaking topublicly release any updates or revisions to any forward-lookingstatement contained in this announcement or incorporated by referenceto reflect any change in AIB's expectations with regard thereto orany change in events, conditions or circumstances on which any suchstatement is based.This announcement contains various references to the Company'sestimate of its NAMA Assets as being ?24.2 billion on a gross loanbasis (i.e. before taking account of ?2.3 billion of loan lossprovisions as at 30 June 2009). That estimate by AIB of the likelyvalue of its NAMA Assets is based on:* the Assumptions (as defined below);* the work undertaken by the Company in response to a request made by the interim NAMA management to provide NAMA with details in respect of certain of the Group's bank assets; and* certain parts of the speech delivered by the Minister for Finance for Finance to the Dáil (the lower house of the Irish parliament) on 16 September 2009 (included in Appendix IV of Part I of the Circular).Shareholders should note that the extent of AIB's NAMA Assets thatmay be acquired by NAMA will be determined by the NAMA Act and theEligible Bank Assets Regulations and it may be different from theestimated figure referred to above. Accordingly, it should be notedthat the resolution regarding participation in the NAMA Programme (ifpassed) will authorise the Company to proceed with participation inthe NAMA Programme on the terms contained in the NAMA Act.The "Assumptions" are:(i) NAMA Assets with a value of approximately ?24.2billion on a gross loan basis (i.e. before taking account of ?2.3billion of loan loss provisions as at 30 June 2009) will betransferred from AIB to NAMA;(ii) AIB will receive in consideration for thetransfer of its NAMA Assets (excluding accrued interest andderivative instruments referred to in (vii) below) NAMA bonds andsubordinated NAMA bonds with an aggregate value of approximately?17.0 billion, equating to the average industry-wide discount of 30per cent. for NAMA Assets announced by the Minister for Finance on 16September 2009;(iii) the ?24.2 billion referred to in (i) abovecomprises ?17.1 billion in respect of land and development loans tocustomers of AIB and ?7.1 billion in respect of those facilities thatwere classified in AIB's loan book at 30 June 2009 as associated withsuch loans to those customers;(iv) only land and development loans (and associatedloans) recorded in AIB's books in Ireland, the United Kingdom, theUnited States and Canada will transfer to NAMA;(v) borrowers with land and development loans with anaggregate value of less than ?5.0 million per borrower will beexcluded;(vi) five per cent. of the purchase price of the NAMAAssets will be in the form of subordinated NAMA bonds; and(vii) in addition to the gross loan balances referred toin (iii) above, accrued interest and derivative instruments relatingto the NAMA Assets will form part of the transfer to NAMA. It isassumed that AIB will receive consideration from NAMA for the accruedinterest and derivative instruments net of the average industry-widediscount of 30 per cent. as referred to in (ii) above-ENDS-This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 30.11.2009 - 08:04 Uhr
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