Urgent bill on back burner as Lone Star sleeps on it

The Cypriot parliament was in no hurry on Thursday to vote on an emergency bill that would have allowed the government to block a potential takeover of the island’s largest bank, after an American private equity fund said it would sleep on it at least until next year.

Private equity firm Lone Star had until Friday afternoon to submit a binding offer to buy the Bank of Cyprus, which prompted the finance ministry earlier this month to scramble and prepare legislation to authorize the government to block a hostile takeover of the systemic financial institution on security grounds.

Days before Friday’s 5pm deadline, Lone Star said it would not submit a formal offer this time around but did not rule out revisiting the issue after a required six month waiting period.

But according to Kathimerini Cyprus, many issues have remained unanswered after it emerged that no bill proposal ever made it to the floor of the House on Thursday.

Kathimerini’s Panayiotis Rougalas said the decision to pull back proposed legislation was made a day after Lone Star issued a statement that it would not make a binding offer this time around.

According to Rougalas, “it turned out that the bill was conceived only because of the unreciprocated flirt between Lone Star Funds and the Bank of Cyprus,” with the financial editor taking note that legislation ought to have been in effect within the first half of 2020 as per European harmonization laws.

Lone Star’s decision not to make a formal offer, after the bank had rejected three earlier unsolicited offers away from public scrutiny, meant that the Dallas-headquartered company could only come back with an offer after six months.

Unless a new acquirer emerged by Friday at 5pm, a most unlikely scenario, it appeared that the Cypriot government would have at least half a year to think things through regaridng the Lone Star affair. 

But the proposed legislation, which would have essentially provided tools for the finance minister to block a sale on national security grounds or public order concerns, was now on the back burner Rougalas said.

“Now there are questions as to when will it pass so that the finance ministry can be in a position to protect investments in organizations that it considers to be of critical importance to the Cypriot economy,” he added.