Barclays To Sell $12.3bn Credit Market Assets To New Co
September 16 2009 - 9:18AM
Dow Jones News
U.K. bank Barclays PLC (BCS) Wednesday announces the
restructuring of $12.3 billion of credit market assets by a sale of
the assets to Protium Finance LP.
MAIN FACTS:
-Protium is a newly established fund whose objective is to
purchase credit market assets from third parties and manage those
assets over time to benefit from their long term cash flows.
-The activities of Protium will initially be supported by $450
million of new funding provided by the partners of Protium and by a
10-year loan to Protium of $12.6 billion by Barclays.
-The loan will be used primarily to fund the purchase of the
assets from Barclays.
-As part of the transaction any excess cashflows following
repayment of the loan to Barclays will accrue to the partners of
Protium.
-The assets will remain on balance sheet for regulatory
purposes; consequently the transaction will not reduce the
regulatory capital required for these assets and may lead to an
increase.
-The assets will be sold at current fair values and therefore
Barclays expects it will record neither a gain nor a loss on
completion of the sale.
-Barclays will not consolidate Protium for accounting purposes
and will derecognise the assets.
-Assets comprise structured credit assets insured by monolines
($8.2 billion), RMBS/Other ABS assets ($2.3 billion) and
residential mortgage assets ($1.8 billion) held in Barclays
Capital.
-Structured credit assets comprise assets with a fair value of
$3.6 billion and monoline guarantees valued at $4.6 billion.
-The loan has a commercial rate of return fixed at U.S.D LIBOR
plus 2.75% (expected to amount to a cumulative total of $3.9
billion)
-Loan is secured by a charge over the assets of Protium.
-By London Bureau, Dow Jones Newswires; Contact Ian Walker; +44 (0)20 7842 9296; ian.walker@dowjones.com