“IFC had the option of converting its bonds into shares as far back as 2005, but chose to do this now, because the price at which the conversion was made is below the market level,” said Banca Transilvania’s General Manager, Robert Rekkers. The conversion price is RON 1.5049 (some €0.35) per share, and represents the average between the high and low levels registered by Banca Transilvania’s shares on the Bucharest Stock Exchange (BVB). The weight was established based on the daily volume of BT stock transfers, in the 90 days when BVB was open for trading, before the price was fixed. Banca Transilvania issued 2,500 nominative convertible bonds on 15 September 2005, which will reach maturity on 15 July 2010. The issue had two tranches.

Tranche A, worth $20 mln, includes 2,000 bonds reserved for subscription by IFC, as main investor, part of an agreement signed with Banca Transilvania, while Tranche B is worth a total $5 mln, includes 500 bonds, and was destined for the public. The purpose of the issue was the extension of the tier two capital base and the financing of the bank’s general operations, including the expansion of its branch network. The nominal value of one bond was $10,000. The prospect indicates that the bonds have a variable interest rate set every six months depending on LIBOR 6M, plus a three percent margin established for the first period, but adjustable depending on the long-term sovereign foreign currency credit ratings set by Moody’s for Romanian state bonds.

Banca Transilvania’s foreign currency convertible bond issue was the first of its kind by a lender operating on the Romanian market, and took place between 2-8 September 2005. At present, loans granted by IFC in Romania amount to €600 mln, while total investments are worth some €1 billion.