VIENNA: The Austrian province of Carinthia is offering to buy back the senior bonds of "bad bank" Heta Asset Resolution at 75 percent of their nominal value with interest, a special-purpose vehicle created by the province said on Wednesday.
The province guaranteed the debt of defunct lender Hypo Alpe Adria, from which Heta was formed. It is aiming to buy back guaranteed bonds with a total nominal value of 11 billion euros ($12.1 billion), dwarfing its annual budget of around 2 billion.
The Austrian government has agreed to lend Carinthia the money to pay creditors as the province seeks to avert the prospect of bankruptcy over the issue. The offer is based on a contribution from Carinthia and the sale of Heta's assets.
A special-purpose vehicle that Carinthia set up and from which Heta's creditors would be paid, the Kaerntner Ausgleichzahlungs-Fonds, said in a statement that the long-awaited offer was of 75 percent of the senior bonds' "adjusted specified denomination", and 30 percent for subordinated bonds.
"The adjusted specified denomination equals the sum of the specified denomination of each instrument and accrued and unpaid interest in respect of the specified denomination of each instrument (or amortised face amount in case of any zero coupon note) up to and including March 1, 2015," it said.
The details of the offers will be published on Thursday, it added. Citigroup and JPMorgan are acting as offer agents and Citibank is the tender agent.
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