Lombard shareholders approve plan for reverse takeover
Long-suffering Lombard Group shareholders have the opportunity to recoup a fraction of their investment in the failed financial company after approving an Australian insurance company's offer for the shell as a backdoor listing on the New Zealand stock exchange.
Thursday, March 11th 2010, 11:22AM
by BusinessDesk
Perth-based Australian Consolidated Insurance, which manages just under $100 million of insurance premiums across Australia and New Zealand, is proposing the creation of a new NZX-listed entity, Lombard Insurance Group.
Under the proposal, Lombard will make a takeover offer to ACIL shareholders for all ACIL's 42.8 million shares. It will then offer 1.48 million new shares in Lombard as consideration for the ACIL shares, or 34.6 Lombard shares for each ACIL share. Lombard would then buy back the shares at 1.2 cents apiece. Lombard shareholders can accept all or part of the buy-back offer, which closes on April 10.
Lombard Finance, the major part of the Lombard Group, went into receivership almost two years ago owing 4,400 investors $127 million. Its so-called assets were 27 loans related to bare subdivisions and uncompleted residential developments, with 18 of the loans second or third mortgages or worse. Debenture holders received their first payment of 6.5 cents from receivers PriceWaterhouseCoopers in December 2009, and have been told they can expect to claw back between 17% and 29% of their original investment.
If the deal is accepted for the Lombard Group, which is effectively a shell company with zero value, ACIL chairman and chief executive Wayne Miller will become CEO of the newly formed Lombard Insurance Group.
The new company will then raise another $10 million through a share issue.
The ACIL group has 18 subsidiaries in insurance broking, underwriting, risk management and insurance premium funding.
"The primary objective of the company is to secure capital as a listed entity to continue its business model of earnings, accretive acquisitions, retire debt and build equity for long term capital growth," the company said in its 2009 financial statements.
ACIL posted a profit of A$233,000 in the 12 months to June 2009. Miller said he wants to grow the business through further acquisitions in Australia and New Zealand, with a goal to managing a minimum of A$500 in premiums within three years of the takeover, from about A$63 million in 2009.
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