September 17, 2014 / 6:19 PM / 4 years ago

Investors seek injunction on sale of insurer by BES successor

People walk near an office of Portuguese bank Banco Espirito Santo (BES) in downtown Lisbon August 26, 2014. REUTERS/Hugo Correia

LISBON (Reuters) - A group of bondholders of insolvent Espirito Santo Financial Group on Wednesday requested a court injunction against the sale of Portuguese insurer Tranquilidade by the successor of Banco Espirito Santo - rescued by the state last month.

Investor association ATM said in a statement the injunction request reinforces their previous class action lawsuit on which the court is yet to deliberate, and is aimed at preventing U.S. fund Apollo Global Management from acquiring Tranquilidade.

The increasing legal challenges highlight the difficulties that BES and its successor Novo Banco face as they try to recover some of the massive debts of the bank’s founding Espirito Santo family. The exposure to family businesses led to the lender’s 4.9 billion euro($6.35 bln) rescue on Aug. 3.

Novo Banco, the good bank that was carved out of BES, has said it agreed on the terms of the sale with Apollo, but would not specify what they are. Any deal still has to be approved by regulators.

Sources told Reuters earlier the deal was worth around 200 million euros (260 million US dollars), involving an injection of some 140 million euros into the insurance firm to keep it afloat, with the rest to be paid to Novo Banco.

Novo Banco is now the formal owner of Tranquilidade, which had previously been owned by Espirito Santo Financial Group, a family holding company that is now under creditor protection.

But investors insist the bank’s claim on Tranquilidade as a result of a pledge of its shares to guarantee debt payments is invalid.

Apollo has been taking part in an auction of Tranquilidade since early 2014, months before BES and the Espirito Santo family first revealed their severe debt problems.

(1 US dollar = 0.7714 euro)

Reporting By Andrei Khalip

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