23 Jan 2020 07:45
BANK AUDI S.A.L.
Bab Idriss - Omar Daouk StreetBank Audi Plaza, P.O. Box 11-2560Beirut - Lebanon
INFORMATION STATEMENT
January 23, 2020
Dear Global Depositary Receipt Holder:
Reference is hereby made to the Amended and Restated Deposit Agreement dated February 25, 2019 (as may be amended from time to time, the "Deposit Agreement") between Bank Audi s.a.l. (the "Bank")) and The Bank of New York Mellon, in its capacity as depositary (the "Depositary"), relating to the Global Depositary Receipts issued in respect of common shares of the Bank (the "GDRs"), each GDR representing one common share with a nominal value L.L. 1,670 (the "Common Shares"). Capitalized terms used herein without otherwise being defined shall have the respective meanings assigned thereto in the Deposit Agreement.
The Depositary, as the shareholder of record of the Common Shares evidenced by GDRs, has received notice of the Extraordinary General Meeting of the Shareholders of the Bank to be held on February 20, 2020 (the "General Meeting"), at the Bank's head office in Beirut, which (among other things) sets forth the agenda for such General Meeting. References in this Information Statement (this "Information Statement") to the "Holder" of any GDR shall mean the person registered as the holder of such GDR on the books of the Depositary. In accordance with Section 5 of the Deposit Agreement, a copy of such notice and agenda is being sent hereby to each person who is a Holder on January 23, 2020, which is the record date (the "Record Date") established by the Depositary for this purpose (which is as near as practicable to February 19, 2020, being the corresponding record date set by the Bank in respect of the General Meeting).
As set forth in such notice, at the General Meeting, shareholders of the Bank, including the Depositary, will be asked to consider and vote upon the following agenda:
1. Agree to the receipt of USD denominated cash contributions to capital convertible into common shares ("Cash Contributions"), and set their amount, terms and conditions;
2. Approve the conversion of the Cash Contributions into common shares;
3. Increase the Bank's capital following the conversion of the Cash Contributions into common shares;
4. Amend articles 6 and 8 of the Bank's By-Laws to reflect the above;
5. Submit the actions described in items 1, 2 and 3 for approval by Banque du Liban, the central bank of Lebanon; and
6. Grant the Chairman of the Board of Directors (acting singly) or any 2 Directors - General Managers (acting jointly) the necessary powers in order to implement the foregoing resolutions.
Each Holder is hereby requested to return to the Depositary voting instructions, as provided in this Information Statement, by which such Holder may give instructions to the Depositary to vote for or against each and any resolution specified in such agenda.
After careful consideration, the Board of Directors recommends a vote in favor of each such resolution.
Yours very truly,
Samir Hanna
Chairman - General Manager
Bank Audi
INFORMATION STATEMENT
Table of Contents
Page
AVAILABLE INFORMATION...................................................................................................................................... 3
VOTING RIGHTS OF HOLDERS................................................................................................................................. 3
SUMMARY BACKGROUND INFORMATION.......................................................................................................... 3
VOTING INSTRUCTIONS.............................................................................................................................................. 4
INFORMATION REGARDING BANK AUDI S.A.L................................................................................................. 5
ANNEX I - TERM SHEET.............................................................................................................................................. 6
AVAILABLE INFORMATION
No person has been authorized to give any information or to make any representation other than those contained in this Information Statement, and, if given or made, such information or representation must not be relied upon as having been authorized by the Bank. No delivery of this Information Statement nor any offer or distribution of any securities to which this Information Statement relates shall, under any circumstances, create any implication that there has been no change in the affairs of the Bank since the date of this Information Statement or that any information contained or referred to herein is correct as of any time subsequent to the date as of which it is given. This Information Statement does not constitute the solicitation of a proxy to or from any person in any jurisdiction to or from whom it is unlawful to make such offer or solicitation within such jurisdiction.
VOTING RIGHTS OF HOLDERS
In accordance with Section 5 of the GDRs, the Depositary is seeking voting instructions from the Holders in order to exercise or cause to be exercised the voting rights in respect of the Deposited Shares, as directed by such voting instructions, to the extent permitted by Lebanese Law.
Common Shares, which have been withdrawn from the deposit facility under the Deposit Agreement and transferred on the Bank's register of members to a person other than the Depositary or its nominee, may be voted by the registered owner thereof; however, Holders may not receive sufficient advance notice of the General Meeting to enable them to withdraw Deposited Shares and vote at the General Meeting.
SUMMARY BACKGROUND INFORMATION
I. Acceptance of USD denominated cash contributions to capital, their conversion into common shares and the resulting increase of the Bank's capital
On November 4, 2019, Banque du Liban, the central bank of Lebanon, issued Circular 532, pursuant to which it requested that Lebanese banks, among other things, increase their Common Equity Tier 1 Capital (by 20% with respect to their level as at December 31, 2018 prior to June 30, 2020) through USD denominated cash contributions to capital;
On December 26, 2019, the Board of Directors, acting on a recommendation by its Group Executive Committee, resolved, in application of the aforementioned circular, to propose to the General Assembly of Shareholders to accept USD denominated cash contributions from holders of common shares in an aggregate amount not exceeding USD 311 million (representing approximately 10% of the Bank's consolidated Common Equity Tier 1 as at December 31, 2018). In consideration of the current market conditions and expected shareholders appetite, the Board further recommended that the cash contributions be convertible into common shares at a conversion price of USD 1.11 per share (being equivalent to the nominal value of the share, i.e., LBP 1,670) and recommended that the General Assembly resolves to proceed to such conversion immediately upon acceptance of the Cash Contributions.
Participation in the Cash Contributions is restricted to the holders of common shares and holders of common shares will be permitted to participate pro rata to their holdings of shares. Any Cash Contribution not subscribed for in the initial allocation may be re-allocated to holders of shares who participate in the offer on a pro rata basis to their holdings of shares, and thereafter, any Cash Contribution remaining may be allocated to holders of shares who participate in the offer, in the sole discretion of the Board of Directors.
The indicative term sheet of the Cash Contributions is attached to the present information statement.
In consideration of the above, the General Assembly is invited to (i) accept USD cash contributions to capital convertible into common shares as per the annexed terms, (ii) convert the Cash Contributions into common shares at a conversion price of USD 1.11 per share, and (iii) increase the Bank's capital to reflect the conversion of the cash contributions into common shares;
II. Amendments to the By-Laws
Pursuant to applicable regulations, the issuance of new shares (as a result of the conversion of the Cash Contributions) and the resulting increase of the Bank's capital described under section I above necessitates resulting amendments to the Bank's By-Laws.
Accordingly, in its meeting held on December 26, 2019, the Board of Directors resolved to propose to the General Assembly to approve, upon its approval of the action described above, the amendment of Articles 6 and 8 of the By-Laws to reflect such matters as specified above.
III. Grant of Power
In its meeting held on December 26, 2019, the Board of Directors also noted that the actions described above require the obtaining of certain authorizations and the completion of certain other acts. Accordingly, the Board of Directors proposes to the General Meeting to (i) submit the actions described above for approval by the Central Bank of Lebanon, and (ii) empower the Chairman of the Board of Directors (acting singly) or any 2 Directors - General Managers (acting jointly) to seek all necessary authorizations and to perform all acts as may be necessary or advisable in the completion of such matters as are approved.
IV. Summary of Matters Submitted to the General Meeting for Approval
Accordingly, the Board of Directors of the Bank has convened the General Meeting to consider and approve the following resolutions:
1. Agree to the receipt of USD denominated cash contributions to capital convertible into common shares ("Cash Contributions"), and set their amount, terms and conditions;
2. Approve the conversion of the Cash Contributions into common shares;
3. Increase the Bank's capital following the conversion of the Cash Contributions into common shares;
4. Amend articles 6 and 8 of the Bank's By-Laws to reflect the above;
5. Submit the actions described in items 1, 2 and 3 for approval by Banque du Liban, the central bank of Lebanon; and
6. Grant the Chairman of the Board of Directors (acting singly) or any 2 Directors - General Managers (acting jointly) the necessary powers in order to implement the foregoing resolutions.
VOTING INSTRUCTIONS
Each Holder is hereby requested to return to the Depositary voting instructions, in the form provided separately by the Depositary for this purpose, by which such Holder may give instructions to the Depositary to vote for or against each and any resolution specified in the agenda for the General Meeting.
In order for a voting instruction to be valid, the above-mentioned form of voting instructions must be completed and duly signed by the respective Holder (or in the case of instructions received from the clearing systems should be received by authenticated SWIFT message or market standard authenticated message format) and returned to the Depositary by the date that the Depositary shall specify in such form of voting instructions.
____________________
INFORMATION REGARDING BANK AUDI S.A.L.
For information regarding the Bank, Holders are advised to review the following documents:
- The Bank's Annual Report for 2018 encompassing:
o The Audited financial statements of the Bank as of and for the year ended December 31, 2018 and the accompanying notes and auditors' report;
o The "Management Discussion and Analysis" which summarizes the Bank's activity during the year ended December 31, 2018.
The above documents can be downloaded from Bank Audi's website: www.bankaudigroup.com or may be obtained free of charge from the Bank and the Depositary at the addresses set forth below:
The Depositary:
The Bank of New York Mellon - Depositary Receipts
240 Greenwich Street, 22nd Floor
New York, NY 10286
Attn: Mr. Tony Tooma
Email: tony.tooma@bnymellon.com
Phone: 1 (212) 815 - 2136
The Bank:
Bank Audi s.a.l.
Bab IdrissOmar Daouk StreetBank Audi Plaza, P.O. Box 11-2560BeirutLebanon
Attn: The Group Corporate Secretary
Email: Corporate.Secretary@bankaudi.com.lb
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ANNEX I - TERM SHEET
CASH CONTRIBUTIONS CONVERTIBLE INTO COMMON SHARES
This indicative term sheet (this "Term Sheet") is subject to amendment, and the Bank may cancel the raising of Cash Contributions ("CC"), which are convertible into common shares of the Bank, at any time in its sole discretion. In order to participate in the transaction described in this Term Sheet, you must be a holder of Shares (as defined below) and you must not be in the United States or be a U.S. person, as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended. The offer of CC is subject to (i) the consent of Banque du Liban, (ii) confirmation by the Capital Markets Authority that the subscription to the CC does not require the issuance and distribution of a prospectus, and (iii) the approval of the Bank's shareholders, as required under applicable law.
Issuer | Bank Audi SAL (the "Bank") |
Eligible Participants | The offer of CC (the "Offer") will be made to all registered holders of common shares of Bank Audi SAL (the "Shares"), including The Bank of New York Mellon as depository of Shares represented by GDRs, in each case pro rata to their holdings of Shares, and to no other party. Any CC not subscribed in the initial offer may be allocated to holders of Shares who participate in the Offer on a pro rata basis to their holdings of Shares, and thereafter, any CC still not subscribed may be allocated to holders of Shares who participate in the Offer, in the sole discretion of the Bank's board. |
CC Size | Up to USD 311,000,000; there is no minimum size. |
CC Date | [•] February 2020, tentative. |
Maturity Date | Subject to the conversion provisions set out below, the CC have no maturity date and are perpetual. |
Currency | The CC are denominated in US Dollars. |
Status and Subordination | The CC will: - not bear interest - not be secured or covered - constitute Common Equity Tier 1 Capital - rank pari passu among themselves - rank junior to the Bank's Preferred Shares in the right to receive payments out of the assets of the Bank upon any liquidation or winding up of the Bank - rank junior to any Tier 2 Capital instruments - rank senior to the Bank's common shares in the right to receive payments out of the assets of the Bank upon any liquidation or winding up of the Bank. |
Subscription | Holders of Shares will be required to execute a commitment form in order to participate in the Offer, pursuant to which they will be required to make certain representations, warranties, acknowledgements and agreements, including those reflected below. It is intended that the Offer will be made available to holders of GDRs, through The Bank of New York Mellon, as depository, although no assurance can be given in this respect. |
Conversion of the CC into Common Shares | The CC may be converted into Shares subject to the approval of the extraordinary general assembly of the shareholders of the Bank and to obtaining the approval of Banque du Liban over the conversion and over the capital increase authorizing the issuance of new Shares. The subscription to common shares by a Bank director and/or by any shareholder who holds, or as a result of the conversion will hold, more than 5% of the Shares is also subject to approval by Banque du Liban, as required under applicable laws and regulations. |
Conversion Ratio | Holders of CC will be entitled to receive a number of Shares, rounded down, equal to the nominal amount of CC divided by 1.11. By way of example, a holder of USD $1,000 of CC will be entitled to receive 900 Shares. |
Effect of Conversion | Upon conversion of CC, the CC shall be cancelled. |
General Provisions Applicable to Conversion | It shall be the responsibility of the holders of the CC to pay all applicable stamp, transfer, registration and similar taxes and duties, together with any value added or other tax thereon arising in connection with the funding of the CC and their conversion into Shares and comply with all applicable laws and regulations relating thereto, including, (x) if applicable, obtaining the consent of Banque du Liban to the ownership of Shares and (y) completing all formalities, documents and instruments, as may be required to effect the delivery and transfer of the Shares, including such documents and instruments, as may be required by Midclear and Banque du Liban. The issuance of Shares on conversion as provided above is subject to the verification of the completion of the formalities for the issuance of common shares by a legally convened and held extraordinary general assembly of shareholders of the Bank, as required under applicable law. |
No Repayment | Subject to the conversion of the CC, holders of the CC will not have the benefit of any right to require the Bank to repay the CC except upon liquidation of the Bank and only to the extent that the CC have not been converted into Shares. |
Use of Proceeds | The net proceeds of the CC will strengthen and enhance the Bank's Common Equity Tier 1 Capital. The Bank is expected to maintain the proceeds of the CC in USD, including upon conversion of CC into ordinary shares, subject to the approval of Banque du Liban, to the extent required. |
Governing Law and Jurisdiction | The Laws of the Lebanese Republic. |
Risk Factors | An investment in CC is speculative and subject to considerable risks, including (but not limited to) the following: - Since 17 October 2019, Lebanon has witnessed significant and widespread protests against corruption and requesting the resignation of the Government, which has taken place, and its replacement with a technocratic cabinet. There can be no assurance that such protests will not continue to cause disruptions, including disruptions that affect the Bank or its financial condition, or that a new cabinet will be appointed in a timely manner. - Lebanon is undergoing a fiscal, economic, monetary and political crisis, which is unprecedented in scope and scale, which has affected the Lebanese banking sector, including the Bank. - Banks operating in Lebanon have imposed restrictions on overseas transfer and withdrawals of foreign currencies, including U.S. Dollars. - In light of the adverse conditions affecting Lebanon, the Bank, in common with other banks, has suffered material adverse changes, the extent of which is not fully known at present. - The Bank operates in Lebanon and, accordingly, its financial condition, results of operations and business prospects are closely related to the overall political, social and economic situation in Lebanon, which, in turn, is tied to the political situation in the region. - The Republic's credit ratings have been significantly and repeatedly downgraded; the Bank's credit ratings, in common with the credit ratings of other rated Lebanese banks, have been downgraded, including to RD by Fitch and ca by Moody's (in respect of the Bank's baseline credit rating). The Republic has non-investment long-term foreign currency credit ratings, as follows: (i) CCC (negative outlook) by S&P; (ii) Caa2 by Moody's (under review); and (iii) CC (negative outlook) by Fitch. - In case of conversion of the CC to Shares, holders of Shares who do not participate in the Offer will see their holdings of Shares diluted, potentially significantly. - The Shares to be issued upon conversion of the CC (if any) will not benefit from double voting rights until they have been outstanding for a period of two years. The above is only a partial list of risks related to the CC. |