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The rescue deal involves a 40% writedown on Metro Bank’s £250 million Tier 2 notes. These will be replaced with higher-coupon bonds maturing six years later, ensuring most of the debt remains unimpaired. The bank is set to swap subordinated bonds for new ones due in 2034 with a 14% coupon rate.
Jaime Gilinski, the largest investor in Metro Bank, has committed to injecting fresh funds into the bank and increasing his stake to 53% as part of the rescue deal. The restructuring also includes extending the maturity of senior notes due in 2025 to 2028 with an increased coupon rate of 12%. In addition, Metro Bank will issue an additional £175 million of these new senior notes.
However, this rescue plan hinges on a key condition: Metro Bank must achieve a 75% acceptance rate by October 13 for its debt structure overhaul. If it fails to meet this threshold, the haircut will increase to 45% for subordinated notes and a new 5% one will be applied to senior bonds.
Earlier this year, Metro Bank skipped a call option on these risky notes. This decision led to the coupon resetting to 9.139%, further contributing to the precarious position of these bonds before the announcement of the rescue deal.
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