UK’s Metro Bank rejected takeover approaches from Shawbrook, in talks for debt restructuring, equity injection

(Reuters) -British lender Metro Bank on Saturday rejected a series of takeover approaches from specialist business lender Shawbrook and later held talks with bondholders about an equity injection alongside a debt restructuring, media reports said.

Metro Bank rejected a series of takeover approaches from Shawbrook, including one made in the second half of September, Sky News reported on Saturday.

It is unclear whether any live discussions were ongoing between the two companies, while the valuation of Shawbrook’s offers could not be established, the report said.

Later, Bloomberg News reported that the bondholders have been in talks with Metro Bank about an equity injection by existing investors that would be carried out alongside a debt restructuring, citing a person familiar with the matter.

The proposal would extend the maturity of its outstanding senior debt and convert the subordinated debt into equity, the Bloomberg report said, adding that shareholders will need to inject new equity to avoid a severe dilution.

Sky News said that the meeting with the bondholders was aiming to thrash out a refinancing package totalling more than 500 million pounds ($611.90 million), and Bloomberg later said that Metro’s 250 million pounds tier 2 notes would be converted into equity and the maturity of 350 million pounds of senior bonds due 2025 would be extended.

Both Metro Bank and Shawbrook declined to comment on the Sky News report when contacted by Reuters. Metro didn’t immediately respond to request for comment about the debt restructuring and equity injection.

Metro’s largest shareholder Colombian billionaire Jaime Gilinski, who owns around a 9% stake through his investment vehicle Spaldy Investments, also did not immediately respond for comment when reached via LinkedIn.

Reuters had reported on Friday that Metro Bank is set to discuss funding options with its shareholders over the weekend, as the lender seeks to shore up its finances and assure regulators after a volatile week of trading.

The mid-sized British lender’s shares plunged on Thursday following reports it is trying to raise as much as 600 million pounds to strengthen its capital levels.

London-based Shawbrook is a specialist lender serving real estate professionals, SMEs and consumers. It has a loan book of 10.5 billion pounds, according to its website.

($1 = 0.8171 pounds)