Permnt Tsb 30 Regulatory News (73HR)

headline: permanent tsb Group Holdings PLC announces the repurchase of €400m 10% contingent Convertible notes from the irish state

Update

Pursuant to the recent announcements in respect of its capital plans, permanent tsb Group Holdings plc (the "Group") today announces that it has agreed terms for the repurchase of the €400m 10% Contingent Convertible Notes from the Irish State at a premium of €10.544m.

Transaction details

The repurchase will be contingent upon the successful execution of the previously announced forthcoming capital raise of €525m, consisting of €400m of new equity and €125m of an Additional Tier 1 instrument, to be raised from private investors. This, together with other capital measures will satisfy the capital shortfall identified in the adverse scenario of the 2014 Single Supervisory Mechanism Comprehensive Assessment (SSM CA).

The Group has agreed a clean price for the repurchase of 102.636, representing a premium payable of €10.544m in addition to the €400m principal and accrued interest.

The Directors consider, having consulted with the Group's ESM advisor Davy, that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned.

Financial Effect

The net benefit to the Group is the saving of future interest payments of c.€49m offset by the premium of €10.544m.

In the Income Statement of the Group, as measured on an Effective Interest Rate basis under IFRS, this will be presented as an aggregate loss on repurchase of c.€52m in H1 2015, which is offset by future interest expense savings of c.€90m.

Background

The €400m 10% Contingent Convertible Notes were issued by the Group's subsidiary permanent tsb plc (ptsb) on 27 July 2011 following the conclusion of the Prudential Capital Assessment Review. The notes had an original term of 5 years and were due to mature on 28 July 2016.

The key terms and conditions of the Contingent Convertible Notes are detailed as follows:

· The coupon interest rate is fixed at 10% payable annually in arrears which can be increased to 18% if the Minister for Finance wishes to re market the notes;

· The notes are convertible into the ordinary shares of permanent tsb Group Holdings plc, the parent of ptsb, in the occurrence of a Conversion Event;

· Conversion Event is defined as the occurrence of 1) a Capital Deficiency Event where ptsb's core Tier 1 capital falls below 8.25% or the Central Bank of Ireland notifies ptsb, that it has determined that its financial and solvency condition is deteriorating in such a way that a Capital Deficiency Event is likely to occur in the short term and/or 2) a Non-Viability Event where the ECB determines that ptsb may become insolvent or unable to pay its debts as they fall due, as defined in the related Agency Deed.

 Rationale for repurchasing

The Contingent Convertible Notes do not count as qualifying capital for the purposes of the SSM CA unless they are converted to equity. Thus, the only circumstances in which the Contingent Convertible Notes could be utilised to address the capital shortfall would be by way of their conversion into Ordinary Shares (which could only occur in circumstances where a conversion event of such Contingent Convertible Notes had occurred and no such conversion event has occurred).

Any conversion of the Contingent Convertible Notes in those circumstances would also further increase the equity holding of the Irish State in the Group and could amount to a new injection of State aid.

In addition, repurchasing the Contingent Convertible Notes will significantly reduce the associated interest costs of the Group in 2015 and 2016 in respect of such Contingent Convertible Notes.

It is expected that the repurchase will be completed on the agreed terms without delay following the completion of the capital raise.

Ciarán Long

Group Secretary

Contact Details

Glen Lucken,

Group Chief Financial Officer

Tel: +353 1 669 5145

Media:

Ray Gordon

Gordon MRM

ptsb@gordonmrm.ie

Mobile +353 87 241737