Hibernia Corp.'s new $95 million debt restructuring has put to rest doubts about the New Orleans banking company's ability to survive, banking analysts said.

The planned swap of debt for equity is the first step in a three-part plan to bring Hibernia's capital levels up to regulatory requirements.

A rights offering of common stock and the sale of a Texas subsidiary are the other two elements of the plan.

"We're not concerned with whether the company is going to make it," said Frank Anderson, analyst with Stephens Inc., Little Rock.

Hibernia's capital levels fell below regulatory requirements after it was hit by $175 million in aggregate losses in 1990 and 1991 on loans for highly leveraged companies and commercial real estate. Earlier this year, Hibernia's shares fell to a low of $2.50.Turning the CornerTier 1 and leverage capitalratios at Hibemia Corp. After debt 3/31 restructuringTier 1 4.63% 6.23%Leverage 2.45% 3.52%Source: Hibemia Corp. American Banker

"The most diplomatic way to put it is that they were being treated most skeptically by the market," said John Works, an analyst at Keefe, Bruyette and Woods Inc.

Hibernia shares closed Monday at $5.25, unchanged for the day. Analysts said the impact of the debt restructuring was already figured into the stock price.

Under the plan agreed to on Friday, creditors led by Chase Manhattan Bank would exchange short-term debt, carrying an interest rate of 12.5%, for $60 million of preferred stock convertible into 21.8 million shares of common stock.

The creditors would also receive warrants for 1.8 million shares of common stock and $35 million of senior and subordinated debt.

Help for Leverage Ratio

Thus, the exchange will raise about $60 million in Tier 1 capital, adding more than 1 percentage point to its leverage capital ratio. Hibernia's leverage capital ratio would rise to 3.52% of assets from 2.45% at March 31.

Regulators usually require a leverage capital ratio of 3% to 5%, depending on the bank's health.

"A bank such as Hibernia needs a leverage ratio of 5%," Mr. Anderson said.

To get to the regulatory requirement, Hibernia plans to raise more equity through a rights offering to existing shareholders. It also has placed its $1 billion-asset Texas bank subsidiary up for sale.

"The really operative ratio is the leverage ratio," said Robert Close, Hibernia's treasurer. He added that "post rights offering, post recapitalization, and post sale of Texas we will be over [regulatory requirements.]"

The recapitalization agreement and other capital-raising plans "pretty much ensures their viability going forward," Mr. Works said.

He noted that Hibernia's non-performing assets have been trending downward since second-quarter 1991.

Mr. Close declined comment on the expected dividend and interest rates for the new preferred stock and debt securities.

Terms of the planned rights offering have not been registered with the Securities and Exchange Commission, but a source said shareholders could be offered up to one additional share each at a discount to the market price.

If Hibernia's rights offering achieves a specified success rate, its creditors will be required to exchange additional debt for up to $19 million in equity. The agreement requires shareholder and regulatory approval.

Hibernia had 28.3 million shares outstanding at yearend.

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