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Last Trade - 24/10/12

Sector
Financials
Size
Mid Cap
Market Cap £1.25bn
Enterprise Value £-3.80bn
Revenue £2.09bn
Position in Universe th / 1809

RPT-EXCLUSIVE-Alpha Bank picks Davidson Kempner as preferred bidder for $12 bln Galaxy bad loans - sources

Sat 21st November, 2020 7:00am
(Repeats story published on Friday.)
    * Davidson Kempner trumps rival bid by PIMCO - sources
    * Deal ranks as Greece's largest ever NPL portfolio sale
    * Galaxy Project valued at about 290 mln euros - source
    * Alpha's loan servicing unit, Cepal, seen as main prize

    By Pamela Barbaglia and George Georgiopoulos
    LONDON/ATHENS, Nov 20 (Reuters) - Greek lender Alpha Bank
 ACBr.AT  has selected U.S. investment fund Davidson Kempner as
its preferred bidder to buy a $12 billion portfolio of
non-performing loans in what will be Greece's largest-ever sale
of bad debt, sources told Reuters.
    The portfolio, known as Galaxy Project and worth 10.8
billion euros ($12.81 billion), also includes the disposal of
Alpha's bad loan servicing unit, Cepal.
    Davidson Kempner has valued the assets at about 290 million
euros, trumping a rival offer by U.S. investment giant Pacific
Investment Management Company (PIMCO), one of the sources said.
    Alpha Bank declined to comment while Davidson Kempner and
PIMCO were not immediately available.
    The sale, which is expected to be finalised by the end of
2020, is the most significant attempt by a Greek bank to clean
up its balance sheet amid fears that the proportion of soured
loans to businesses and individuals will surge as a consequence
of the COVID-19 crisis.
    Greece has the highest bad-loans ratio in the European
Union.
    Banks offload bad debts, normally at a fraction of their
face value, to free up their balance sheets to make new loans
and keep both their own business and economies going.
    The sale of the Galaxy portfolio is expected to reduce
Alpha's non-performing exposure (NPE) ratio to 24% from around
43% and its non-performing loan (NPL) ratio down to 13% from
30%, a banking source familiar with the deal said.
    Alpha launched the process early this year, drawing initial
interest from a series of bidders including Italian firms Cerved
 CERV.MI  and Credito Fondiario, the sources said.
    But only Davidson Kempner and PIMCO made binding offers and
advanced to the final stages of the auction, with Alpha's board
selecting Davidson Kempner as its preferred bidder after a board
meeting on Friday.
    Cepal, with a headcount of about 900, will be servicing the
portfolio of bad loans that Davidson Kempner is expected to buy,
in addition to non-performing loans of other parties. It
currently services a little under 30 billion euros of impaired
loans.
    Alpha Bank, which initially held only 40% of Cepal, took
full control of the platform in July from Centerbridge. 
    "Cepal is the main prize for this deal as the new owner will
be entitled to the annual servicing fees that Cepal generates,"
one of the sources said.
    Another source said Davidson Kempner's bid came with an
attractive earn-out scheme and limited contractual protections.
    The decision to negotiate a deal with Davidson Kempner could
be announced early next week, the sources said.
    It follows a similar transaction by Greece's Eurobank to
sell 80% of its loan servicing unit FPS to Italian debt recovery
firm doValue  DOVA.MI  along with a chunk of mezzanine and
junior notes from a 7.5 billion euro bad loan securitization
known as Project Cairo.
    Alpha Bank has applied to fold Galaxy into a Greek
government scheme, dubbed Hercules, which provides state
guarantees on the senior tranches of the securitisation.
 ($1 = 0.8435 euro)

 (Reporting by Pamela Barbaglia in London and George
Georgiopoulos in Athens
Editing by Diane Craft and Matthew Lewis)
 ((pamela.barbaglia@thomsonreuters.com;  +442075427723; Reuters
Messaging: pamela.barbaglia.thomsonreuters.com@reuters.net))
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