Hedge funds locked into rescue deal?

According to Robert Peston at the BBC, the hedge funds acquiring a majority stake in The Co-operative Bank "can only refuse to put the additional £125m of cash into Co-op Bank if creditors fail to vote for conversion of Co-op Bank's £1.3bn of bonds and prefs into shares and new bonds.

"So they don't have a lot of leverage to improve the terms of the deal.

"As for scuppering the rescue altogether, that doesn't look altogether rational - because hedge funds' significant investment in Co-op Bank bonds might well be wiped out in those circumstances (though it would not necessarily be wiped out altogether; they might still be able to convert their bonds into shares, I am told)."