BRP Renaud und Partner mbB: Possible claims of bondholders in the three-digit million range due to, inter alia, cum/ex transactions of Portigon AG
BRP Renaud und Partner mbB ("BRP") represents a group of creditors of Portigon AG ("Portigon").
The Group is composed of holders of profit participation certificates issued directly by the former WestLB AG ("WestLB") and bonds issued indirectly via two special purpose entities, Hybrid Capital Funding I Limited Partnership and Hybrid Capital Funding II Limited Partnership ("Issuers"; "Hybrid Capital Funding Bonds", which are based on silent partnership agreements concluded by the Issuers with the former WestLB ("Silent Partnerships"; holders of profit participation certificates and silent partners together) ("Hybrid Capital Providers").
The group is defending itself against past and threatened future participation in losses from activities which have nothing to do with the activities of a credit institution and, a fortiori, with those of a former Landesbank with a public-service mission.
For example, Portigon has formed substantial provisions due to its participation in dividend arbitrage transactions ("cum/ex transactions") and possible breaches of duty regarding the quotation of USD-LIBOR interest rates ("USD-LIBOR manipulations") in the financial years 2016 to 2018 and had its Hybrid Capital Providers participate in the losses incurred as a result of the formation of provisions for risks arising from its participation in cum/ex transactions and USD-LIBOR manipulations.
On 2 December 2019, Portigon disclosed in an ad hoc announcement that it would form further provisions for the 2019 financial year as a precautionary measure due to the ongoing investigations by the public prosecutor's office regarding the participation in cum/ex transactions. It therefore expects to close the 2019 financial year with a loss in the range of approximately € 500 million to € 600 million.
As Portigon had already had its Hybrid Capital Providers participate in losses in previous financial years resulting from provisions formed by Portigon for risks due to its participation in cum/ex transactions and USD-LIBOR manipulations, there is a risk of recurrence for the financial year 2019.
BRP therefore filed a lawsuit against Portigon on behalf of individual members of the group at the Düsseldorf Regional Court on Thursday, 14 May 2020.
Previously, Portigon had rejected offers of talks and had left unanswered the request addressed to it by individual members of the group to clarify that it would not again have the Hybrid Capital Providers participate in further losses or provisions for risks arising from its participation in cum/ex transactions and possible breaches of duty in the quotation of USD-LIBOR interest rates in the 2019 financial year.
BRP firmly believes that Portigon's Hybrid Capital Providers should not participate in these losses.
The activities for which Portigon is forming provisions, namely for risks arising from its participation in cum/ex transactions and possible breaches of duty in quoting USD-LIBOR interest rates, have nothing to do with the activities of a credit institution.
Such activities were outside the purpose of the company. A reputable businessman would not have carried them out. Such activities are simply punishable. The extraordinary expenses in the form of the provisions formed for the risks arising from such activities are therefore not to be taken into account when calculating the Hybrid Capital Providers' earnings.
BRP has informed Portigon, the Issuers, Hybrid Capital Funding I Limited Partnership and Hybrid Capital Funding II Limited Partnership, as well as the security trustee, HSBC Trustee (C.I.) Limited, about this and has requested the Issuers to take the necessary steps to protect the holders of the capital securities without delay, with a deadline of 2 June 2020.
The holders of the following securities are affected:
|WestLB registered profit participation rights
||EUR 6 million
||Bloomberg identifier for private placement 080X86
|WestLB Bearer Participation Certificates
||EUR 25 million
||WKN 836490 / ISIN DE0008364902
|Hybrid Capital Funding I bond
||USD 300 million
||WKN A0D1KQ / ISIN XS0216711340
|Hybrid Capital Funding II bond
||EUR 240 million
||WKN A0D2FH / ISIN DE000A0D2FH1
The Group invites the holders of the aforementioned securities to join it and to stand united against the actions of Portigon.
BRP believes that there is an immediate need for action with regard to the participation rights.
E-Mail: [email protected]
BRP Renaud und Partner mbB
Tel: +49 711 16445-302
Fax: +49 711 16445-100
End of the press release
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