jchhiminey's  Instablog

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14 years in private equity.
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  • rawalsh2
    , contributor
    Comment (1) | Send Message
    Do you have any information on how to go about executing your option to purchase the 2.2 shares for every 1 currently owned
    29 May 2013, 06:55 PM Reply Like
  • Kurt B. Feierabend
    , contributor
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    I noticed you quoted someone saying, "...shares will receive 7.33 additional shares..."


    That 7.33 number seems to have come from Alpha Bank's recapitalization numbers. It appears that someone mistakenly used Alpha's 7.33 number as National Bank of Greece's number and then that error was copied to numerous sites across the internet.


    The real number seems to be 2.225...and they're not free shares. The pre-emption rights give holders the right to buy 2.225 additional shares at 4.29 euros each. Since today the ADR's closed at $5.03 or 3.78 euros (1 euro = $1.33), there's a strong possibility that shareholders and other investors won't be rushing out to exercise those rights to buy shares at 4.29 euros by the time the rights expire on Thursday (June 13th).


    The Hellenic Financial Stability Fund is putting up most of the money but apparently 10% of the shares need to be owned by other shareholders to keep the bank privatized. I suspect that's in danger now with the share price at $5.03. It's an interesting situation but I don't know if it's worth an investment in the stock, at least not until the dust settles.
    10 Jun 2013, 06:27 PM Reply Like
  • Kurt B. Feierabend
    , contributor
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    Let me retract my past comment regarding the 7.33 figure. That 7.33 figure might be the same for National Bank of Greece as it was for Alphabank if 12% of the newly issued NBG shares are purchased by private investors. The number isn't in NBG's SEC filings but the Hellenic Financial Stability Fund may issue warrants for the acquisition of HFSF's shares at that ratio. The math would work out for 12% that way.


    NBG started with 122,660,120 common shares and will issue 2,274,125,874 more to raise 9.76 billion euros (4.29 euros each). The HFSF picks up most but NBG wants private investors to buy 12% of the new shares to avoid ceding control to HFSF. Because of this, NBG's shareholders received the right to buy, at $4.29 euros each, 2.225 of the new shares for every share they owned previously. 122,660,120 X 2.225 is 12% of the new shares. They have until Thursday to exercise that right.


    If private investors invest at least the threshhold of 800 million euros by exercising their rights, HFSF will issue warrants to those participating shareholders giving them the right to acquire additional shares. Presumably that's the way HFSF is going to exit their ownership. If investors reach the 12% then warrants for 7.33 shares * 12% would equal HFSF's 88% stake and would allow HFSF to exit completely. If investors don't reach that 12% then the number should be higher than 7.33. If investors don't reach threshhold 800 million euros then there won't be any warrants and HFSF will have management control of NBG.


    I don't have any information regarding the price where HFSF has set or will set the strike price of any warrants. It might just be 4.29 euros/share plus interest so they can get their money back.
    11 Jun 2013, 10:07 AM Reply Like
  • Kurt B. Feierabend
    , contributor
    Comments (90) | Send Message
    Update...mostly for myself so I'll have a record in case there are any positive changes convincing me to seriously look into investing in National Bank of Greece. I don't like the situation enough right now to invest. Sorry, Jchhiminey, for taking up your blog.


    NBG's right's offering went through with private investors getting 10.8% ownership and the Hellenic Financial Stability Fund will pick up the tab for the remaining 89.2%. Private investors didn't invest for the full 12% but reached the 10% threshold to avoid state control. That would put the warrants that HFSF may issue to the 10.8% shareholders at 8.26 warrants per share owned.


    There was a good article on http://bit.ly/126YhKQ which gave the mechanics of how the HFSF deals will work with the Greek banks. It says in general, "Warrants can be exercised biannually over the next 4.5 years. The exercise price of each warrant is set to be equal to the offer price of new share, with an interest rate of 3% plus a spread increasing by 100 bps per annum."


    So the exercise price being the offer price (4.29 euros for NBG) plus interest (3% annually to start according to the .pdf) was a good guess on my part.


    My personal feeling regarding NBG at this point is that the equation is, 'insolvent' plus 'cash from recapitalization' equals a value of something less than that cash from recapitalization. The deluge of warrants may be worth something, courtesy of HFSF who is offering that value while absorbing risk to the downside, but I don't think the shares will be credibly worth the 4.29 euros (about $5.62 at current exchange rates) anywhere in the near term.
    21 Jun 2013, 09:02 PM Reply Like
  • Kurt B. Feierabend
    , contributor
    Comments (90) | Send Message
    It's been about a year and a half since I last wrote about NBG, which was around the time of National Bank of Greece's recapitalization by the Hellenic Financial Stability Fund. The bank did another capital raise in early 2014 of about 2.5 billion euros at 2.20 euros/share, or about $2.62/share at current exchange rates.


    Greece is presently undergoing some political turmoil with the prime minister's nominee for president not getting the necessary votes from Greek parliament a few weeks ago. This triggers an election which will happen on Jan. 25, 2015. It appears the Greek extreme leftist Syriza party, while not in power, has become popular and the news outlets generally indicate Syriza has a lead in popularity. Syriza, if they win the election, is looking to reverse the government cost-cutting 'austerity' measures put in place and renegotiate or default on Greece's debt. Understandably, the Greek markets have reacted badly for months. NBG's share price has also dropped significantly.


    NBG ADRs closed today at $1.58...or about 1.33 euros. While my opinion a year and a half ago was that 4.29 euros/share was high, the bank's financial situation appears good. In my opinion, the current 1.33 euros/share would be an excellent price if Greece were in a politically stable environment. I suspect six months from now will see Greece in a much better state...or at least the uncertainty should have lifted in that time frame. Based on that I believe NBG ADRs are currently a good buy.
    6 Jan 2015, 09:05 PM Reply Like
  • Kurt B. Feierabend
    , contributor
    Comments (90) | Send Message
    Six months ago I expected that the uncertainty surrounding Greece's debt would have lifted. However in the past six months, the leftist Syriza party won the elections and Greece has been at loggerheads with the European Central Bank, the European Commission and the International Monetary Fund. The new Greek government's mandate is to seek relief of Greece's sovereign debt and to seek elimination of the austerity measures which were mandated by Greece's creditors as a condition of previous bailouts. The conflict has escalated over time and today it's rare to not see Greece make the front page of financial news everywhere.


    Capital controls were effected in Greece last week with banks closing and Greek nationals now only able to withdraw a maximum of €60 per day from their accounts via ATMs. Greece's banks have been keep solvent up to this time by emergency loan assistance from the European Central Bank but that might stop at any point.


    The turmoil in Greece has also caused the Greek economy to shrink and the government has once again slumped into running a primary deficit. Additionally, Greece missed a €1.6 billion payment to the IMF due the end of June. With heated negotiations about a continued bailout falling flat time after time, Greek prime minister Alexis Tsipras held a referendum to allow Greek citizens to vote on accepting a proposal from creditors even though the proposal had already expired five days earlier. Greek citizens voted roughly 60-40 to not accept the proposal. The referendum seemed to be a play for support.


    The National Bank of Greece is obviously profoundly affected by the current political situation in Greece. Even though the bank was well capitalized previously, the quality of the assets likely have suffered. That would hurt the bank.


    The Hellenic Financial Stability Fund (HFSF) funded by the IMF still owns 57% of NBG's stock and that might give the IMF an incentive to keep NBG and other funded banks afloat, but that doesn't mean the other investors are safer either--another recapitalization of the bank could shrink current shareholders' ownership.


    Greece has turned into quite a saga. I don't know if anyone, other than maybe Greek prime minister Tsipras, really knows how this story is going to end...and he would only know the ending with certainty if he has the goal of default.
    6 Jul 2015, 10:25 PM Reply Like
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