Fundo Garantidor de Creditos Announces Results of the Tender Offer and Consent Solicitation

SAO PAULO, Sept. 14, 2012 /PRNewswire/ -- FUNDO GARANTIDOR DE CREDITOS ANNOUNCES RESULTS OF THE TENDER OFFER and CONSENT SOLICITATION FOR 8.000% Notes due 2012 (ISIN XS0452252835) ("2012 Notes"), 7.000% Notes due 2013 (ISIN XS0523748639) ("2013 Notes"), 7.625% Notes due 2014 (ISIN XS0619861031) ("2014 Notes"), 8.500% Notes due 2015 (CUSIP No. 05955W AA1/ ISIN US05955WAA18) (CUSIP No. 05955X AA9/ ISIN US05955XAA90) ("2015 Notes"), 8.250% Notes due 2016 (CUSIP No. 05955W AB9 / ISIN US05955WAB90) (CUSIP No. 05955X AB7 / ISIN US05955XAB73) ("2016 Notes") AND 8.875% Subordinated Notes due 2020 (CUSIP No. 059493 AB2 / ISIN US059493AB23) (CUSIP No. P09133 BF8 / ISIN USP09133BF89) (the "2020 Notes"), (COLLECTIVELY, THE "NOTES"), in each case issued by BANCO CRUZEIRO DO SUL S.A. (THE "BANK").

The Fundo Garantidor de Creditos (Credit Guarantee Fund, "FGC"), announced today that in connection with its previously announced offer to purchase for cash and consent solicitation with respect to the Notes (the "Tender Offer"), it has received tenders of 88.7% of the aggregate principal amount of the Notes.  The conditions to the Tender Offer set out in the Offer Document (as defined below) were not fulfilled.  The Tender Offer was conditioned on a potential acquirer entering into a binding agreement to purchase the Bank.  As the FGC did not enter into an agreement for a binding offer by a potential acquirer, the FGC, in its capacity as temporary special administrator, is submitting their management report to the Central Bank of Brazil in accordance with article 11 (c) of Law No. 2,321/87, based on which the Central Bank of Brazil may declare the extrajudicial liquidation (liquidacao extrajudicial) of the Bank.  Accordingly, the FGC will not accept for purchase any Notes tendered pursuant to the Tender Offer. Furthermore, the terms and conditions governing the 2015 Notes and the 2016 Notes, respectively, will not be amended and will maintain the same terms and conditions as before the Tender Offer.  Similarly, the indenture governing the 2020 Notes will not be amended and will maintain the same terms and conditions as before the Tender Offer. 

Background

The FGC's obligation to purchase Notes in the tender offer to purchase for cash any and all of the Notes and the related consent solicitation for the 2015 Notes, the 2016 Notes and the 2020 Notes was conditioned on the satisfaction or waiver of certain conditions, including a condition that the FGC may terminate the Tender Offer if (i) it has not received from the holders of the Notes tenders of at least 90% of the aggregate principal amount of the Notes (the "Minimum Acceptance Level"), (ii) it has not received from the holders of the local debt obligations tenders of at least 90% of the aggregate principal amount of the local debt obligations, (iii) a potential acquirer of the Bank has not entered into a binding agreement to purchase the Bank or (iv) an extra-judicial liquidation (liquidacao extrajudicial) of the Bank occurs. 

Information about the tender offer

The tender offer and consent solicitation commenced on August 15, 2012 and the full terms and conditions of the Tender Offer are described in the Offer to Purchase and Consent Solicitation Statement, dated August 15, 2012 (the "Offer Document") previously distributed to holders of the Notes.

The FGC has retained HSBC Securities (USA) Inc. ("HSBC") and BofA Merrill Lynch and to act as dealer managers and solicitation agents in connection with the Tender Offer.  Questions regarding the Tender Offer may be directed to HSBC at +1 (888) HSBC-4LM (toll free) or +1 (212) 525-5552 (collect) or BofA Merrill Lynch at +1 (888) 292-0070 (toll free) or +1 (646) 855 3401 (collect).

Neither the Offer Document nor any related documents have been filed with the U.S. Securities and Exchange Commission, nor have any such documents been filed with or reviewed by any federal or state securities commission or regulatory authority of any country.  No authority has passed upon the accuracy or adequacy of the Offer Document or any related documents, and it is unlawful and may be a criminal offense to make any representation to the contrary.

This announcement is not an offer to purchase, a solicitation of an offer to purchase or a solicitation of consents.  The Tender Offer was made solely pursuant to the Offer Document. 

About the FGC, the Bank and the Temporary Regime

The Bank is a private commercial bank which focuses on the paycheck-deductible loan and credit card loan segments in Brazil.  On June 4, 2012 the Central Bank imposed a temporary special administration regime, governed by Decree-Law No. 2,321, of February 25, 1987, as amended (Regime de Administracao Especial Temporaria, "Temporary Regime") with respect to the Bank and its financial affiliates for a period of 180 days, which may be extended by the Central Bank in its sole discretion by an additional 180 days.  The Central Bank imposed the Temporary Regime on the basis of a detected inconsistency of approximately R$1.3 billion (U.S.$633 million) in the loan portfolio owned by the Bank, as well as a related breach of accounting rules.  The Temporary Regime is a less restrictive form of Central Bank intervention in private and non-federal public financial institutions.  The Temporary Regime allows the Bank to continue operating normally and its main purpose is to assist with the recovery of the financial condition of the Bank.  It does not affect the day-to-day business operations of the Bank. 

The Central Bank froze the personal assets of the current controlling shareholders of the Bank, replaced the board of directors and the executive board of the Bank and appointed the FGC as temporary special administrator.  The FGC appointed several external advisors, including PricewaterhouseCoopers Contadores Publicos Ltda., to help the FGC perform its due diligence on the financial information of the Bank.  The FGC is a private and independent non-profit institution, with the corporate purpose of rendering guarantees to associated institutions upon the intervention or extrajudicial liquidation or the insolvency of such institutions, as recognized by the Central Bank.

On August 15, 2012 the Bank published a notice (Fato Relevante) to the market, which published a special balance sheet of the Bank as of June 4, 2012, appearing in the Offer Document and informed the market of the FGC's intent to (i) acquire the Notes pursuant to the Tender Offer as well as a certain amount of local debt obligations of the Bank, (ii) convert a portion of the debt obligations into equity by canceling the obligations, and (iii) sell the Bank to a potential acquirer.  If the conditions to the Tender Offer are not met, the FGC believes the Bank will be liquidated.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains statements that are forward-looking within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934, as amended.  Forward-looking statements are only predictions and are not guarantees of future performance.  These statements are subject to known and unknown risks, uncertainties and other factors which may cause the FGC or the Bank's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Although the FGC believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to the FGC, the FGC cannot guarantee future results or events.  The FGC expressly disclaims a duty to update any of the forward-looking statements.

Contact: Beth Carl of Bondholder Communications Group, +1-212-809-2663

SOURCE FGC