• Group of bondholders propose to accept 92% of face value
  • Offer may win two-thirds majority of creditors, person says

A group of Heta Asset Resolution AG creditors plans to make an offer to Austrian authorities that would accept a payout below par for the “bad bank’s” state-guaranteed debt, according to a person familiar with the bid.

The bondholders are proposing to get 92 cents on the euro for the debt, said the person, who asked not to be identified because the offer isn’t public. It’s unclear how many creditors support the bid, which could break through the stalemate over Heta’s debt. A tender offer for about 11 billion euros ($12 billion) of bonds that was equivalent to 82 cents fell through in March.

Heta’s former owner, the province of Carinthia, had offered to buy senior debt at 75 percent of face value and junior obligations at 30 percent in an offer that expired March 11. The federal government, which refuses to fully step in for Carinthia, later topped up that offer with a zero-coupon bond issued by the Treasury, effectively raising the offer to around 82 percent.

The bondholders’ offer mirrors the structure of the previous one while shortening the maturity of the zero bond, and adds a small coupon of about 30 basis points to the security. The creditors supporting the offer expect to win the needed two-thirds of creditors to back it, the person said.

A spokeswoman for Gaby Schaunig, Carinthian finance secretary, declined to comment. The Adhoc Creditor Group, which represents Heta investors including banks, mutual funds and hedge funds, declined to comment through a spokeswoman.

Heta’s bonds had jumped to the highest level since 2014 on April 7 after Schaunig said she’s ready to open creditor negotiations.

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