SAO PAULO, Aug. 15, 2012 /PRNewswire/ — FUNDO GARANTIDOR DE CREDITOS LAUNCHES CASH 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”) in each case issued by BANCO CRUZEIRO DO SUL S.A.

The Fundo Garantidor de Creditos (Credit Guarantee Fund, “FGC”), today announced that it has commenced an offer to purchase for cash (the “Tender Offer”) any and all of the following note issuances of Banco Cruzeiro do Sul S.A. (the “Bank”): (i) its three outstanding note issuances under its Short Term Note Programme: (a) the 2012 Notes, issued September 11, 2009, (b) the 2013 Notes, issued July 8, 2010 and (c) the 2014 Notes, issued April 14, 2011 (the 2014 Notes together with the 2012 Notes and the 2013 Notes, the “STN Notes”); (ii) its outstanding note issuances under its Medium Term Note Programme: (a) the 2015 Notes, issued February 12, 2010 and (b) the 2016 Notes, issued January 12, 2011 (the 2016 Notes together with the 2015 Notes, the “MTN Notes”); and (iii) its 2020 Notes issued September 22, 2010 (the 2020 Notes together with the MTN Notes and the STN Notes, the “Notes”) for the consideration described below.

Concurrently with the Tender Offer the FGC is soliciting (the “Consent Solicitation”) (i) the proxy of the holders of each series of MTN Notes to pass, at a meeting of the holders of each series of MTN Notes to be held at 12.00 p.m. (New York time) on September 7, 2012 at the offices of The Bank of New York Mellon or such other place as may be notified to Noteholders in advance of the Meeting (or any adjourned such meeting, the “Meeting”) an extraordinary resolution (the “Extraordinary Resolution”) providing for the insertion of a new condition entitling the Bank to redeem all of the Notes of the relevant series at the Tender Consideration (as defined below) plus Accrued Interest, if any, on or after September 12, 2012, and (ii) the consent of the holders of the 2020 Notes to amend those notes to delete among other covenants, the “Merger Consolidation and Sale of Assets” provision (the “Proposed Amendments”). With respect to each of the terms and conditions, the Proposed Amendments require, with respect to the 2015 Notes and the 2016 Notes, a Meeting with a quorum of 75% of the holders of each series and a 75% vote in favor and, with respect to the 2020 Notes, the consents (the “Requisite Consents”) of holders of a majority in aggregate principal amount of those notes outstanding (excluding any notes held by the FGC, the Bank or our respective affiliates). Holders of MTN Notes and 2020 Notes who tender their Notes pursuant to the Tender Offer must provide their consent to the Proposed Amendments pursuant to the related Consent Solicitation.

Holders that validly tender their Notes and, for holders of the 2015 Notes, 2016 Notes and 2020 Notes, deliver their related proxies for the Meeting or consents, as applicable, to the Proposed Amendments prior to August 28, 2012, at 5.00 p.m., New York City time (the “Early Tender Date”) or the Expiration Date (as defined below), as applicable, will be eligible to receive the Tender Consideration, plus the Early Tender Amount, in respect of the Notes tendered by the Early Tender Date, and in each case any Accrued Interest (as set out in the table below). The Tender Offer and related Consent Solicitation will expire at 11:59 p.m., New York City time, on September 12, 2012, unless extended or earlier terminated by us (such time and date, as it may be extended or earlier terminated with respect to the Tender Offer and related Consent Solicitation, the “Expiration Date”).

(1) The amount to be paid for each U.S.$1,000 principal amount of applicable Notes validly tendered and accepted for purchase if tendered by September 12, 2012 (the “Tender Consideration”), excluding accrued and unpaid interest up to but not including the Expiration Date, which will be paid in addition to the Tender Consideration.
(2) The additional amount to be paid for each U.S.$1,000 principal amount of applicable Notes validly tendered and accepted for purchase if tendered by August 28, 2012, at 5.00 p.m., New York City time (the “Early Tender Amount”).

The FGC intends that the holders of the Notes, the FGC and the holders of other obligations of the Bank maturing after September 12, 2012 will all share in the cost of reducing the Bank’s outstanding liabilities in excess of its assets. Accordingly, to the extent the FGC has received, as a result of the transactions contemplated by the Tender Offer and Consent Solicitation, more Notes than it has budgeted for, it may on a pro rata weighted average basis, increase the amount of the Tender Consideration. Furthermore, to the extent a Potential Acquirer (as defined below) of the Bank enters into a binding agreement to purchase the Bank for more that R$1.00, the FGC may, to the extent practicable and in its sole discretion, reflect a portion of those excess amounts by increasing the amount of the Tender Consideration on a pro rata weighted average basis. A “Potential Acquirer” of the Bank means a financial institution authorized to operate in Brazil that meets the following requirements (i) it has a minimum shareholders’ equity compatible with the Tender Offer and above R$2.5 billion; (ii) the provision of guarantees for the minimum capital contribution required, which shall be made in cash; (iii) no credit risk due to funding transactions entered into with the FGC that could compromise its future financial condition; and (iv) no pending issues with the Central Bank (as defined below) which could prevent an immediate approval by the Central Bank (as defined below).

Among other circumstances, the FGC may terminate the Tender Offer and Consent Solicitation for all of the Notes (i) if it has not received from the holders of the Notes tenders of at least 90% of the aggregate principal amount of the Notes, (ii) if it has not received from the holders of the local debt obligations tenders of at least 90% of the aggregate principal amount of the Notes, (iii) if a Potential Acquirer of the Bank has not entered into a binding agreement to purchase the Bank or (iv) if an extra-judicial liquidation (liquidacao extrajudicial) of the Bank occurs.

Notes tendered together with the related proxies or consents, to the extent applicable, may be withdrawn on or prior to 5.00 p.m. New York City time on August 28, 2012 (the “Withdrawal Deadline”). Offers may only be withdrawn in their entirety and may not be amended in part. Assuming the FGC’s acceptance of Notes tendered pursuant to the Tender Offer, payment of the Tender Consideration with respect to such Notes will be made on the settlement date by the FGC or a fund designated by the FGC, which is expected to be within three business days following the Expiration Date or as promptly as practicable thereafter.

If the Requisite Consents are not obtained in connection with the Consent Solicitation for a particular series of Notes, such Consent Solicitation may be terminated, and in such case, the Proposed Amendments will not become effective; however, the FGC may in its sole discretion accept and purchase Notes tendered pursuant to the concurrent Tender Offer for an amount in cash equal to the Tender Consideration.

The terms and conditions of the Tender Offer and Consent Solicitation, as well as the Proposed Amendments, are described in the Offer to Purchase and Consent Solicitation Statement, dated August 15, 2012 (the “Offer Document”). Copies of the Offer Document are available to holders of Notes from Bondholder Communications Group, LLC, the information and tender agent for the Tender Offer and Consent Solicitation (the “Information and Tender Agent”). Requests for copies of the Offer Document should be directed to the Information and Tender Agent at +1 212 809 2663, +44 (0)20 7382 4580, bcarl@bondcom.com or www.bondcom.com/bcs.

The FGC reserves the right, in its sole discretion, not to accept any tenders of Notes or deliveries of consents for any reason. The FGC is making the Tender Offer and Consent Solicitation only in those jurisdictions where it is legal to do so.

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 and Consent Solicitation. Questions regarding the Tender Offer and Consent Solicitation 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 Documents 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 and Consent Solicitation are being made solely pursuant to the Offer Document. The Tender Offer and Consent Solicitation are not being made to, nor will the FGC accept tenders of Notes and deliveries of consents from, holders in any jurisdiction in which the Tender Offer and Consent Solicitation or the acceptance thereof would not be in compliance with the securities or blue sky laws of such jurisdiction.

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 of Brazil (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” or “RAET”) 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 our 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