The Lombard Group, the parent of failed Lombard Finance, will go to its shareholders this week with details of a reverse takeover deal that could see it 98.5% owned by shareholders of Perth-based insurer Australian Consolidated Insurance (ACIL).The deal h
The Lombard Group, the parent of failed Lombard Finance, will go to its shareholders this week with details of a reverse takeover deal that could see it 98.5% owned by shareholders of Perth-based insurer Australian Consolidated Insurance (ACIL).
The deal has obtained approval from NZX and is subject to approval from Lombard shareholders, who will be posted details of the deal this week, Lombard announced to NZX today.
The details of the shareholder meeting, including the resolutions which make up the transaction, are expected to be announced on Thursday.
Lombard chief executive Michael Reeves said a reverse takeover by ACIL would be positive for all Lombard stakeholders.
"The insurance industry has been one of the least affected industry sectors and appears to have a positive outlook," he said.
ACIL is an insurance broking and underwriting agency that purchased Hamilton based underwriter Classic Cover Insurance in June last year. It manages in excess of $A80 million ($NZ98.42 million) of insurance premiums from offices in Perth, Sydney, Melbourne, Brisbane, Auckland and Hamilton.
Under the reverse takeover deal, Lombard proposes to make a takeover offer to ACIL shareholders for all ACIL's existing 42.8 million shares. It will then offer 1.48 billion new shares in Lombard as consideration for the ACIL shares, or 34.6 Lombard shares for each ACIL share.
If the takeover offer is accepted by all ACIL shareholders, those shareholders will hold 98.5% of Lombard, up from the 90% announced last year.
Before the takeover completion, Lombard will reorganise its subsidiaries so that assets and selected liabilities, unrelated to the existinmg business, will be consolidated under a special purpose subsidiary.
Lombard shareholders will receive shares in that company in the same proportion as they currently hold. If the takeover offer is successful, Lombard will make a buy back offer of 1.196 cents per share.
Lombard shareholders can choose to accept all or part of the buy back offer.
Lombard Finance was put into receivership in April 2008, owing $127 million to about 4400 investors. Its biggest asset, a property loan book worth $137 million, turned out to comprise mostly bare subdivisions or uncompleted residential developments and that 18 of the loans were second or third mortgages or worse.
Most of the loans were not paying interest and were set up to be repaid in full, including interest, when the loan matured.
