Barclays submits offers for a 2005 CLO

Barclays has announced that it is looking to buy up notes in ACA CLO 2005-1, a deal now managed by Apidos. Barclays has released an offer sheet (see table) and given noteholders a deadline of 17 February at 5pm New York Time to respond. The bank states that it is the sole holder of the deal’s $207 million triple-A tranche while it also holds $8 million of equity in ACA CLO 2005-1.

It appears as though the bank is looking to exercise the CLO’s call option. According to the deal documents, a majority of the equity investors can direct an optional redemption after October 2009. Barclays has stated that its offers are subject to certain conditions, one of them being that at least $4 million of subordinated notes are tendered. This would take the bank’s equity holding to just above $12 million, or just over 50% of the total equity tranche. 

In order to hasten the process Barclays has also assigned an early tender premium to the equity notes. If existing equity holders in the CLO accept the bank’s offer by 2 February, the tender price for the first loss tranche will be 70 cents, whereas over stepping this deadline will result in the tender offer being reduced to 63 cents.

Over the last six months a number of banks have looked to table offers for CLOs with a view to calling the deals. Citi, KBC and RBS have all made such moves although the target deals were typically synthetic transactions.

ACA CLO 2005-1 offers