BBK issues bonds worth BD100 million

Manama : BBK and Securities and Investment Company (SICO) jointly announced the opening for subscription of BBK’s BD100 million (US$265.3m) perpetual tier 1 convertible capital securities offering today, which will close on 18 April 2016. 

Commenting on the move, Chief Executive, Reyadh Yousif Sater: “The capital increase will be used for enhancing BBK’s capacity to grow its asset base primarily through core lending activities. It will also fund the Bank’s strategic expansion initiatives, both locally and globally. These include the recent approval to open a representative office in Turkey, and our plans to boost international trade finance activities.” 

The offering is open to all shareholders in BBK’s ordinary share register on the offering record date of 27 March 2016 at a subscription price of BD1.000 per security.

Shareholders also have the right to over-subscribe and transfer their rights to other shareholders or investors of their choice. Copies of the offering prospectus and the subscription application form can be collected from designated branches of BBK, which are BBK’s Main branch, Adliya Financial Mall, Budaiya Financial Mall, Muharraq – Airport Road Financial Mall, Isa Town Financial Mall, Riffa Financial Mall, 9 Exhibition Road Financial Mall, Diplomatic Area Branch, Hamad Town Branch, in addition to the bank’s branch in Kuwait to facilitate the subscription for the bank’s shareholders residing there. These branches will also receive completed application forms and subscription funds from shareholders.

The capital securities offer an attractive annual interest rate of 8.25 per cent for the first five years, after which the rate will be reset to the equivalent of 3-month Bahraini Dinar Interbank Offered Rate (BHIBOR) plus 5.86pc. Interest will be payable on 2 May and 2 October each year, commencing on 2 October 2016. The capital securities, being perpetual, have no fixed or final redemption date; and may only be redeemed at the Issuer’s option after a minimum period of five years after issuance, unless they have been converted by the Issuer.

An option to convert the securities, in whole or in part, into ordinary shares of BBK has been reserved. This option could be exercised in any one of three years – 2019, 2020 or 2021 – subject to approval of BBK shareholders at an extraordinary general meeting. 

Following approval by the Bahrain Bourse (BHB), the securities will be admitted for trading on the BHB from 3 May 2016. This is in line with recent initiatives to bring new products and services to the stock market in order to increase its appeal and competitiveness, which are being steered by the Central Bank of Bahrain.

Najla M. Al Shirawi, Chief Executive of SICO, said: “We are delighted to be working with BBK to lead manage this first-of-its-kind BHD-denominated tier 1 perpetual convertible capital securities issuance in the region.”