http://www.reuters.com/article/2011/07/20/...ealEstateNews&rpc=43 UPDATE 1-Irish Life recap vote on a knife-edge -source Wed Jul 20, 2011 4:10am EDT * Group of dissident investors want to obstruct govt plans * Govt will use law to force through recap if EGM fails * Widespread investor indifference * Recapitalisation needed as part of EU-IMF bailout (Adds more detail) DUBLIN, July 20 (Reuters) - Shareholders in Irish Life & Permanent (IL&P) could reject an effective nationalisation of the struggling bancassurer at an extraordinary general meeting (EGM) later on Wednesday, a source familiar with the proceedings said. Faced with a near 4 billion euros ($5.7 billion) capital hole and heavily reliant on emergency central bank funding, IL&P's board has recommended investors agree to the government injecting up to 3.8 billion euros into the group, wiping out their shareholding and leaving Dublin with a 99 percent plus share of the bank. But a source said there was a 50-50 chance the resolutions could be defeated, meaning the Minister for Finance Michael Noonan will use legislation to force through the recapitalisation, which is required as part of an EU-IMF bailout of the Irish state and banking sector. The group's directors have said if Noonan goes to the courts to trigger the recapitalisation he could do it on less favourable terms with no guarantee that IL&P's shareholders would be able to trade their stock on Ireland's enterprise securities market after its planned delisting from the main indices in Ireland and Britain. The source, who declined to comment further because the results of the EGM will not be known until early afternoon, said only around 30 percent of shareholders were likely to vote due to widespread indifference at the company's fate. A spokesman for the company declined to comment. Once celebrated as the only Irish bank to avoid a state bailout due to its lack of exposure to property developers, IL&P's business model came unstuck when the country's lenders were locked out of debt markets, creating a huge funding strain for its residential mortgage book. Fresh stress tests, agreed as part of the EU-IMF bailout last year, revealed in March that the group had to raise an additional 4 billion euros in capital, sending its shares into freefall and forcing the group to put its prized life insurance arm, with an embedded value of 1.6 billion euros, up for sale. With nationalisation looming, its share price has collapsed from 23 euros hit in early 2007, when Ireland's infamous property bubble was at its height, to just 6 cents currently, giving it a market value of around 13 million euros. DISSIDENTS A group of dissident shareholders, led by Malta-based investment fund Scotchstone Capital, has rejected the recapitalisation plans and have succeeded in getting four extra resolutions tabled at the EGM, which starts at 1030 GMT. The group wants the company to search for private investors and appoint advisers to review fresh options for raising capital. If IL&P's recapitalisation plans are rejected the dissidents' resolutions may be accepted. The government has offered to pump 2.7 billion euros -- 2.3 billion euros via ordinary shares at a price of around 6 cents a share and some 400 million euros via a contingent capital note -- before the end of July. If the group fails to raise around 1 billion euros by selling its life business and imposing losses on junior bondholders, the state will provide that amount by subscribing for shares, also at 6 cents, on a date to be specified by the central bank or government. The expected capital injection this month means Ireland will have taken over five of its once six-strong domestic banking sector, with Bank of Ireland likely making it a clean sweep if its 1.91 billion euros rights issue fails to attract sufficient interest this month. ($1 = 0.705 Euros) (Reporting by Carmel Crimmins; Editing by David Holmes and Hans-Juergen Peters) * Recapitalisation vote has 50-50 chance of being rejected-source |
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