Shearman & Sterling advised a group of holders of lower tier 2 bonds issued by The Co-operative Bank plc in connection with the bank’s £1.5 billion recapitalization plan. The recapitalization plan, if it receives noteholder approval, would be the first-ever creditor bail-in of a bank in the UK.
Under the terms of this recapitalization, holders of the lower tier 2 bonds would receive 70% of the shares in The Co-operative Bank plus £100 million in principal amount of newly issued tier 2 securities of the bank, while the bank’s parent, The Co-operative Group, would retain a 30% equity stake. The lower tier 2 bondholders would also inject £125 million of fresh capital into the bank.
Shearman & Sterling advised the bondholders in their extensive discussions with The Co-operative Bank, The Co-operative Group and UK regulators to agree a recapitalization plan that is supported by retail investor groups. In addition, Shearman & Sterling advised the bondholders on the separation of The Co-operative Bank from The Co-operative Group while maintaining the ethos and principles of the co-operative, addressing governance issues and negotiating the terms of the securities issuance and scheme documentation.
The following team of Shearman & Sterling lawyers from the London office advised on this transaction: Partners Barney Reynolds (Financial Institutions Advisory & Financial Regulatory), Jeremy Kutner and Laurence Levy (Mergers & Acquisitions), Clifford Atkins, Anthony Ward and Mei Lian (Finance), and Solomon J. Noh (Bankruptcy & Restructuring); counsel Azad Ali (Financial Institutions Advisory & Financial Regulatory), Michael Scargill (Mergers & Acquisitions), and Sam Whitaker (Executive Compensation & Employee Benefits); associates Ellerina Teo, Mak Judge (Financial Institutions Advisory & Financial Regulatory), Simon Little, Rebecca Lyne, Milan Thakker, Paul Pasalic, Benedict Pearce, Karen McCormack, Blake Spencer, Matthew Anson, Stacey Jeffreys, Sophie Rees (Mergers & Acquisitions) and Jackson Lam, David Shennan, and Lauren Thompson (Finance); and trainees Inyoung Song, Isla Smith and Lois Howarth.
