More Detail About National Bank of Greece's Capital Raise

Banking, finance, and taxes

Published: May 22, 2013 3:25 pm

Investors have had time to know and prepare for a capital raise of sorts from the National Bank of Greece SA (NYSE: NBG). That is almost upon us and this is bringing a negative reaction that we would not try to tie into the Fed-generated market weakness today.

NBG’s ADR trading in New York has been active with almost 11 million shares bringing the stock down almost 6% to $1.34 today. The 52-week trading range is $0.61 to $3.25. Stock options trading has been thin, except in the November 2013 puts at the $1.00 strike price. We have seen 1,670 contracts trade against an open interest of 4,338 contracts.

Reverse splits are rarely considered a good thing. The question is whether or not that is the case in Greece and the lands of the PIIGS in Europe. NBG and others have been undercapitalized and the recovery until recent days is turning out to have a very short life.

More details are out about the financing. The Athens Stock Exchange daily bulletin states:

National Bank of Greece announces that its Board of Directors, having already taken into consideration the reduction, decided upon by the 2nd Repeat General Meeting of Shareholders of 29 April 2013, in the total number of existing shares (by means of a reverse split at a ratio of 10:1) from 1,226,601,200 to 122,660,120 and simultaneous reduction in share capital, due to be carried out in the course of the next days, determined under the terms of the Council of Ministers Act that (a) the number of NBG new shares to be issued under the capital increase be 2,274,125,874 and (b) the issue price be EUR 4.29 per new share after the reverse split (equivalent to a price of EUR 0.429 under today’s conditions before the reverse split). Immediately after approval, by the Hellenic Capital Market Commission, of the Information Circular for the share capital increase and approval, by the Athens Exchange, for the reduction in the number of common shares and their nominal value, details will be announced to investors by the Bank regarding the implementation of decisions taken by the said General Meeting, and the detailed terms and commencement of the share capital increase procedure.

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