UPDATE 2-Court clears way for Irish Life state takeover 21:47, Tuesday 26 July 2011 * IL&P to get immediate injection of 2.7 bln euros * March stress tests revealed 4 bln euro capital hole * Shareholders that voted against injection to appeal (Adds statement from rebel shareholders) DUBLIN, July 26 (Reuters) - The Irish government was granted a High Court order on Tuesday for the recapitalisation of Irish Life & Permanent , effectively nationalising the bancassurer with an immediate injection of 2.7 billion euros in state funds. Shareholders in Irish Life voted against state plans to take a 99 percent plus share in the bancassurer last week, forcing the government to use sweeping new bank laws introduced late last year to recapitalise the group. Faced with a capital shortfall near 4 billion euros ($5.7 billion), Irish Life was required to fill almost three-quarters of that hole by the end of July under the country's EU-IMF (Berlin: MXG1.BE - news) bailout. "I'm satisfied it is necessary, I'm happy to make this order in this case," Justice Brian McGovern told the court. The dissident shareholders that successfully challenged the board's recommendation for the state injection last week said they would challenge the High Court order on the basis that the recapitalisation was grossly unreasonable and the laws used to implement it unconstitutional. The group of shareholders, led by Malta-based investment fund Scotchstone Capital, has five working days to challenge the order. HUGE FUNDING STRAIN Once celebrated as the only Irish bank to avoid a state bailout due to its lack of exposure to property developers, IL&P came unstuck when the country's lenders were locked out of debt markets, creating a huge funding strain for its residential mortgage book. Stress tests, agreed as part of the EU-IMF bailout last year, revealed in March that the group had to raise the fresh funds, 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. The government will inject 2.3 billion euros via ordinary shares at a price of about 6 cents a share and some 400 million euros via a contingent capital note. If the group fails to raise about 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 capital injection will mean Ireland (Berlin: IIK.BE - news) will have taken over five institutions in its once six-strong domestic banking sector. Bank of Ireland (Irish: BIR.IR - news) became the only lender to escape full state control when it sold a 1.1 billion euro ($1.6 billion) stake to a group of private investors on Monday. [ID:nL3E7IP164] Finance Minister Michael Noonan said Dublin did not receive any similar proposals for Irish Life despite rebel shareholders saying parties were willing to invest in the group. (Additional reporting by Padraic Halpin; Editing by Gary Hill) http://uk.finance.yahoo.com/news/...-2153971478.html?x=0&.v=1 |