Aurelius Dumps Co-op Bank Bonds

Dec 2 2013 | 8:04am ET

Less than a month after forcing the U.K.'s Co-operative Bank to end more than a century of mutual ownership, hedge fund Aurelius Capital Management dumped its interest in the company ahead of a crucial vote.

Aurelius sold its Co-op Bank bonds at a profit prior to Friday's vote on the £1.5 billion rescue plan formerly backed by Aurelius. Under that deal, which was approved by bondholders in spite of the hedge fund's move, Aurelius was to have become Co-op Bank's largest hedge fund shareholder.

Instead, as Co-op admitted that it was losing accounts and amidst a scandal involving its former chairman, Aurelius sold out to Perry Capital, which supported the deal crafted by Aurelius and Silver Point Capital. That rescue allows Co-op to avoid nationalization, while also leaving former parent Co-operative Group with just a 30%. Co-op Bank is expected to go public next year.

Aurelius bought up the Co-op Bank shares after the bank was downgraded in May.


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