FIMBank plc - Rights Issue Details

Wednesday, March 28th, 2018

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The Rights Issue may, in certain jurisdictions, be restricted by law. Persons coming into possession of documents relating to the Rights Issue, or copies thereof, are required to inform themselves about, and to observe, any such restrictions. the Rights Issue is not being and will not be made, directly or indirectly, in or into, the United States, Canada, Japan or South Africa, and any jurisdiction where the extension into or availability of the Rights Issue would breach any applicable law (collectively hereafter referred to as the “Excluded Territories”). Accordingly, copies of documents in relation to the Rights Issue are not being, and must not be, mailed or otherwise forwarded, distributed or sent in or into or from the Excluded Territories and persons receiving documents in relation to the Rights Issue (including custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it into or from the Excluded Territories. Doing so may render invalid any purported application. The Prospectus issued by FIMBank plc of Mercury Tower, The Exchange Financial & Business Centre, Elia Zammit Street, St. Julian’s, STJ 3155, Malta, and being available for download on this website is for information purposes only and does not, and cannot be construed as an offer or invitation to persons present in the Excluded Territories.

By downloading the Prospectus and/or viewing the contents  found on this webpage, you hereby confirm that you are not located within any of the Excluded Territories and that you have read and accepted all the above.

 

On 28 March 2018, FIMBank plc published a Prospectus dated 23 March 2018 in connection with a Rights Issue amounting to approximately USD115.3 million.

The salient details of the Rights Issue are as follows:

Amount Offered:

209,687,428 new ordinary shares with a nominal value of USD0.50 each

Offer Ratio:

2 new shares for every 3 shares held

Rights Issue Price:

USD0.55

Use of Proceeds:

The net proceeds of approximately USD114.4 million (net of expenses) will be used by FIMBank to

(i) to strengthen its capital base and support the general growth of the Group; and

(ii) extinguish outstanding borrowings of USD50 million.

The Prospectus also notes that the proceeds of the Rights Issue will constitute Common Equity Tier I capital forming part of the Issuer’s Own Funds.

Rights Issue Period:

Wednesday 4 April – Wednesday 18 April 2018

Listing:

Official List of the Malta Stock Exchange

Admission to Listing:

30 April 2018

Download:

FIMBank plc – Rights Issue Prospectus dated 23 March 2018

Risk Factors:

Prospective investors are urged to read the Prospectus issued by FIMBank plc dated 23 March 2018 including the risk factors which are found in Section 1 – “Risk Factors” on pages 25 to 33. The below is a summary of the risk factors as contained in the Summary Note which, however, DOES NOT replace the need for prospective investors to read all the risk factors listed and explained in the Prospectus as aforesaid.

Key information on the key risks that are specific to the issuer

World Economy and Cross-Border Trade: The success of the Group’s activities is connected to the overall performance of international trade in the global economy and in particular to the level of cross-border trade between countries at varying stages of economic development and which may not yet have achieve the level of political stability of countries members of the OECD. 

Credit and Concentration Risk: The Group is exposed to the risk of loss if any of its customers, clients or market counterparties fails to fulfil its contractual obligations. The Group is also exposed to the risk which may arise because of lack of diversification in business which may lead to excessive exposures or concentrations in one counterparty or geographical area. 

Country and Transfer Risk: The Group is also exposed to risks associated with the economic, social and political environment of the home country of the borrowers to which it provides banking services. The Group may also be exposed to currency risk when a borrower’s obligation is not denominated in his local currency. 

Foreign Exchange Risk: The group is exposed to foreign exchange risks which include the monetary assets of the liability of the Group that are not denominated in the functional currency of the Group. 

Settlement Risk: The Issuer faces settlement risk due to the fact that few financial transactions are settled simultaneously or on a same day basis. Consequently, the Issuer could suffer a loss if the counterparty fails to deliver on settlement date. 

Interest Rate Risk: The Group is exposed to movements in interest rates. The risk impacts the earnings of the Group as a result of changes in the economic value of its assets, liability and off-balance sheet instruments. 

Liquidity Risk: The Issuer may be unable to meet its obligations as they become due because of an inability to liquidate assets or obtain adequate funding or that it cannot easily unwind or offset specific exposures without significantly lowering market prices because of inadequate market depth or market disruptions. 

Operational Risk: The Group’s activities are exposed to the potential that inadequate information systems, operations problems, breaches in internal controls, fraud, or unforeseen catastrophes will result in unexpected losses. 

IT Risk: The Group is exposed to risks which may arise from inadequate information technology and processing, inappropriate IT strategy and policy or inadequate use of the Group’s IT. 

Legal Risk: The Group is subject to legal risks which arise from the possibility that unenforceable contracts, lawsuits, or adverse judgements can disrupt or otherwise negatively affect the operations or condition of the Issuer. 

Regulatory Risk: A change in the Issuer’s classification as a High Priority ‘less significant bank’ to a ‘significant institution’ in terms of the SSM Regulation and the SSM Framework Regulation, could have an adverse impact on the Issuer’s business, capital structure and financial conditions, due to direct supervision and regulation by the ECB, and the introduction of more stringent criteria and possibly additional regulatory requirements.

The Issuer is subject to a number of prudential and regulatory controls, including the requirement to maintain adequate capital resources and to satisfy specified capital ratios at all times. Any change in these requirements, or a change in the way these requirements are interpreted or applied by the authorities, may lead to further unexpected and enhanced requirements in relation to the Issuer’s capital, leverage, liquidity and funding ratios or alter the way such ratios are calculated.

A perceived or actual shortage of capital held by the Issuer could result in actions by regulatory authorities, including public censure and the imposition of sanctions. This may affect the Issuer’s capacity to continue its business operations, generate a sufficient return on capital, pay future dividends or pursue acquisitions or other strategic opportunities, affecting future growth potential. If, in response to any such shortage, the Issuer raises additional capital through the issuance of share capital or capital instruments, existing shareholders or holders of debt of a capital nature may experience a dilution of their investment.

The adoption of the BRRD has given resolution authorities a set of innovative resolution powers to manage bank failures in an orderly manner, including the powers to write down the claims of unsecured creditors and to convert unsecured debt claims to equity. If the Issuer is facing financial difficulties, resulting in the Issuer meeting the applicable conditions for resolution, the Resolution Authority acting through Resolution Committee may use a number of tools to prevent the Issuer from failing, including the power to write down or convert shares and other capital instruments (bail-in). Should FIMBank become subject to such write-down, conversion or resolution power, it may adversely affect FIMBank’s business, financial condition, ability to pay dividends, results of operations and/or prospects. In addition, an investment in the New Ordinary Shares may be diluted or cancelled by the Resolution Committee without any compensation and this on the basis of the principle that the shareholders of an institution under resolution bear first losses.

Risk of Data Protection Failure and Fraud: The Issuer’s business, financial conditions, results of operation and prospects could be materially impacted by any wrongful appropriation, loss, or disclosure of data that breaches any data protection laws and regulations, due to the potential investigative or enforcement action by the relevant authorities, and the loss of the goodwill of existing and new customers. The GDPR, which will take effect from 25 May 2018, will introduce substantial changes to data protection law, including an increased emphasis on business being able to demonstrate compliance with their data protection obligations, and will therefore require significant investment by the Issuer in its compliance strategies. It will also introduce fines of up to 4% of an undertaking’s annual global group turnover or €20 million (whichever is greater) for failure to comply with provisions of the GDPR. 

Compliance Risk: The Issuer may incur a range of sanctions if it does not comply with any local and international laws and regulations, including but not limited to banking laws, rules and regulations, Anti-Money Laundering and Anti-Terrorism Financing laws and regulations, Listing Rules, company law, and International Financial Reporting Standards. 

Reputational Risk: Negative publicity regarding the Issuer’s business practices, whether true or not, could be particularly damaging for the Issuer since the nature of its business requires maintaining the confidence of depositors, creditors, regulatory authorities and of the general marketplace. 

Strategic and Business Risk: Improper strategic choices or the actual implementation of strategic decisions can have a serious and significant impact on prospective profit and capital results. 

External Factors: The Group’s performance may be adversely affected by external factors beyond the Issuer’s control. 

Issuer’s Solvency: Shareholders assume the credit risk of FIMBank as the Issuer of the Shares. 

Brexit: United Kingdom’s exit from the European Union may have a direct or indirect impact on the business environment within which the Issuer and the Group operates. The implications of Brexit are not entirely clear so the extent of the impact on the Issuer and the Group cannot be assessed appropriately. 

Funding Risk: Funding Risk is the risk that the Group may not be able to achieve its business plans due to: being unable to maintain appropriate capital ratios; failing to manage its liquidity and funding risks sufficiently; or the impact of changes in foreign exchange rates on capital ratios and/or adverse changes in interest rate curves impacting structural hedges of non-interest bearing assets/ liabilities. 

Credit Rating Risk: The Issuer is subject to the risks of downgrading of credit ratings. 

Risks Associated to Majority Shareholder: The Issuer’s major shareholders form part of the same group. Such dependency highlights the risk of ‘contagion’ if the KIPCO Group were to find itself in financial difficulties.

Key information on the key risks that are specific to the securities 

Currency Risk: The Shares are denominated in US Dollars, meaning that exchange rate fluctuations may affect the realisation of the original investment of the investor who may use a different currency to calculate the value of investments. 

Dividend Risk: FIMBank’s ability to pay dividends and its ability to receive distributions from its investments in other entities is subject to applicable local laws. In addition, other restrictions, including regulatory requirements, capital and leverage requirements, statutory reserves, financial and operation performance and applicable tax laws may restrict its ability to pay dividends. 

Share Price Fluctuation Risk: The market price of the Ordinary Shares could be subject to significant fluctuations due to a change in sentiment in market regarding the Ordinary Shares and/or securities of other financial institutions. 

Dilution Risk: Eligible Shareholders who do not (or who are not permitted to) subscribe for their full entitlement to New Ordinary Shares in the Rights Issue will experience dilution in their ownership of the Issuer. 

Securities Law Risk: Securities laws of certain jurisdictions may restrict Shareholders in exercising the rights attaching to their Ordinary Shares and participating in the Rights Issue. 

Orderly and Liquid Market: The existence of an orderly and liquid market for the Shares depends on a number of factors and there can be no assurance that an active secondary market for the New Shares will develop or, if it develops, that it will continue and that an investor will be able to sell or otherwise trade in the Shares at all.

Disclaimer:

Prospective investors are urged to base any investment decision on all the information contained in the Prospectus. The value of investments may increase as well as decrease and past performance is not an indication of future performance. Prospective investors should consult an independent financial adviser for personal advice prior to participating in the Rights Issue.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd is Sponsor, Manager & Registrar to the FIMBank plc Rights Issue.

This webpage has been prepared based on the Prospectus dated 23 March 2018 issued by FIMBank plc and no representations or guarantees are made by Rizzo, Farrugia & Co. (Stockbrokers) Ltd with respect to the accuracy of the data. This webpage is for information purposes only. It is not intended to be and should not be construed as an offer or solicitation to acquire or dispose of any of the securities or issues mentioned herein. Rizzo, Farrugia & Co. (Stockbrokers) Ltd accepts no responsibility or liability whatsoever for any expense, loss or damages arising out of, or in any way connected with, the use of all or any part of this webpage.

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