Lone Star Is Said to Make Firm Offer for Portugal’s Novo Banco

(Bloomberg) -- Lone Star Funds plans to make a binding offer for Novo Banco SA as Portugal’s central bank tries for a second time to sell the lender, a person with knowledge of the sale said.

The Bank of Portugal seeking offers for the remnants of Banco Espirito Santo SA after saying bids submitted last year were too low. Friday is the deadline for final offers. A spokeswoman for Lone Star who asked not to be identified citing company policy declined to comment.

Portugal is seeking to recoup some of the 4.9 billion euros ($5.4 billion) used to rescue the lender. Its total assets stood at 55 billion euros at the end of the first half, with equity of 5.6 billion euros. In June, the Bank of Portugal said it received four proposals for Novo Banco, without naming the bidders.

In July, Portuguese lender Banco Comercial Portugues SA’s Chief Executive Officer Nuno Amado confirmed the bank handed in a letter of intent, and operating partner Gustavo Guimaraes at Apollo Global Management LLC said in October the private equity firm was bidding for Novo Banco with Centerbridge Partners. Apollo declined to comment on the matter Friday. Banco BPI SA also handed in a proposal in June, according to another person with knowledge of the sale. BPI declined to comment.

Aside from an outright sale, the Bank of Portugal is considering a transaction involving a purchase by institutional funds, with some designated as “cornerstone investors” that would commit to purchase a stake in the lender.

Banco Espirito Santo, once Portugal’s biggest lender by market value, was bailed out in 2014 after regulators ordered it to raise more capital following the disclosure of potential losses on loans linked to companies in the family-controlled Espirito Santo Group. The central bank moved the lender’s deposits and most of its assets to Novo Banco.

To contact the reporters on this story: Sharon Smyth in London at ssmyth2@bloomberg.net, Anabela Reis in Lisbon at areis1@bloomberg.net. To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net, Neil Callanan at ncallanan@bloomberg.net, Ross Larsen, Cindy Roberts