Japonica extends offer to buy Greek bonds until end of September

Japonica Partners & Co, the US investment firm trying to buy as much as 4 billion euros ($5.3 billion) of Greek government debt, said it’s making a final, month-long extension of its tender offer.

The offer now has a deadline of September 30, according to a statement issued by the Providence, Rhode Island-based company on Friday. Japonica first made its tender offer in June and has extended it twice since then. Xander Heijnen, a spokesman for Japonica, said there will be no further extensions.

Japonica last month announced it would pay a minimum purchase price of 40 percent of the bonds’ principal amount, saying the offer reflected a fair value for securities that are volatile and “highly illiquid.” The offer falls below the so-called strip of 45 percent, which is the average price investors are bidding for outstanding Greek government debt, according to Athens-based Piraeus Bank SA.

“After this deadline, we will begin to allocate our funds elsewhere,” Heijnen said in an interview Friday. He declined to comment on how many bonds the firm has purchased.

Japonica said in that it’s appropriate to apply a 15 percent to 20 percent discount to Greek debt given that buyers are limited, making it difficult for bondholders to sell their stakes. With the discount included, Japonica said its offer to purchase bonds at 40 percent of the principal amount is actually a premium to closing prices on August 23.

Japonica reduced the number of specific Greek bonds it’s targeting from 11 to six, maturing between February 2028 and February 2033.

Greece is in its sixth year of recession and dependent on bailouts from European governments to avoid bankruptcy. German Finance Minister Wolfgang Schaeuble said August 20 that Greece, which has already received 240 billion euros in rescue funds from the euro area and International Monetary Fund, will need another aid program to reach its debt sustainability targets.

Hedge funds including Third Point LLC and Greylock Capital Management LLC made money last year by buying the country’s government bonds, betting that European officials would continue to rescue the nation from financial collapse to prevent the region’s debt crisis from spreading.

Japonica, run by former Goldman Sachs Group Inc banker Paul Kazarian, gained notoriety in the US during the late 1980s and early 1990s for deals including an attempted buyout of food company Borden Inc, a failed $1.6 billion takeover of railroad company CNW Corp and the purchase of appliance maker Sunbeam-Oster Co. [Bloomberg]