The distressed debt fund, which was central to the negotiations which led to the bank’s revised £1.5bn recapitalisation plan, is understood to have agreed the sale before the recent scandal involving Rev. Paul Flowers came to light, but signed over the bonds to Perry after it emerged.
Although it is not known exactly what Aurelius’s financial interest in the Co-op was, it is known that after the recapitalisation it would have owned less than 9.9% of the troubled bank’s shares.
Perry, a New York-based fund with offices in London which has in the past invested in the debt of General Motors and Porsche, will take on Aurelius’s commitment to the deal and sign up to the continuation of its ethical policies.
News of Aurelius’s exit – it is thought the sale was driven by financial returns rather than concerns about the bank’s image – came as the bank sought to close a loop-hole resulting from its plan to fill the £1.5bn hole.
One tranche of bondholders, who owned what are known as the Lower Tier Two (LTT) bonds, were due to get 45% of the bank’s equity in return for their debt, and a further 25% in return for a £125m rights issue.
However, in order to close a loop-hole which meant that people with limited bond holdings could subscribe for more than their fair share of equity through the right issues, the plan has been amended to mean that the LTT holders will now receive 57% in exchange for their debt, and 13% for the rights issue.
Results from a series of votes to approve the plan by different tranches of bondholders will be known on December 11.
Co-op Bank was given until December 31 to fill the £1.5bn shortfall.
