TWO HOLDERS of Irish Nationwide subordinated debt have issued legal proceedings against the building society and the trustee of the debt programme.
The proceedings were issued through the English courts.
The building society said yesterday it intends to “vigorously defend the proceedings.”
“No event of default or potential event of default under the Notes has occurred and the Society remains subject to and continues to honour the terms of the Notes,” Irish Nationwide (INBS) said yesterday, adding that the claimants “have no cause of action”.
The notes in question are 13 per cent, lower Tier 2 bonds, due 2016.
It is understood the plantiffs may be basing their legal action on comments by the Minister for Finance in late September that he may seek burden sharing with INBS and Anglo bondholders.
Outlining the final figure for the recapitalisation of the Irish banking system in late September, Mr Lenihan said that, while under domestic law senior debt obligations rank equally with deposits and other creditors, he expected the subordinated debt holders in Irish Nationwide and Anglo Irish Bank to make a “significant contribution” towards meeting the losses of the banks which are now nationalised. Among the holders of Irish Nationwide-issued subordinated debt is Russian billionaire and owner of Chelsea football club, Roman Abramovich. Last month his investment vehicle, Millhouse, threatened to sue Ireland over its treatment of junior debtholders in Irish Nationwide.
“We urge Irish authorities to reconsider their position on INBS subordinated bonds and come out with a detailed plan on what is going to happen to this institution,” Millhouse said. It is believed Millhouse bought the subordinated bonds in August 2009.
The Government took Irish Nationwide into State control earlier this year as the National Asset Management Agency applied heavy discounts on the value of its property development loans.
It is estimated that INBS has about £700 million of debt outstanding from four bond issues. Its bonds are trading at a significant discount in the secondary market, with the 2016 bonds quoted at about 30 cents on the euro.
