FCMB shareholders okay Finbank’s acquisition, $50m IFC loan
LAGOS–Shareholders of First City Monument Bank (FCMB) Plc, yesterday, endorsed a proposed acquisition of Finbank Plc as well as $50million International Finance Corporation (IFC) loan obtained by the Bank.
In the same vein, FinBank shareholders, yesterday, also approved the merger with FCMB at its Court Ordered EGM held inAbuja.
Barely a day ahead of Central Bank of Nigeria (CBN) September 30 deadline for recapitalisation of rescued banks, shareholders of First City Monument Bank (FCMB) Plc, unanimously approved the acquisition of Finbank Plc, thus paving way for further negotiations for 100 percent acquisition deal between both banks.
The shareholders at an Extra Ordinary General Meeting (EGM) held inLagos, overwhelmingly supported the acquisition deal with 99.97 per cent of vote cast by shareholders present in support of Bank’s resolution to acquire Finbank through its wholly owned investment subsidiary, FCMB Investments Limited (FIL).
However, 0.02 percent objection votes of minority shareholders could not count despite a minority shareholder’s warning that any vote to the proposed investment in Finbank would be of no value.
Under the acquisition deal, the Finbank shareholders will exchange 60 shares for one FCMB shares.
Meanwhile, a minority shareholder of Finbank Plc and Managing Director, First Aluminium Nigeria Plc, Mr. Ben Elfrink, claimed that Finbank was in a winding up procedure before the Federal High Court, citing SEC 413 of Companies and Allied Matters Act (CAMA) stipulating that no company being in such procedure can dispose of shares, assets and so on without permission of the court.
Similarly, the shareholders ratified the Bank’s loan agreement over loan transaction and convertible loan transaction totaling US $70 million from International Finance Corporation (IFC).
Specifically, shareholder ratified $50 million loan transaction with IFC for financing its lending operations just as they approved a convertible loan transaction of $20 million, which approval therefore authorised the directors to allot ordinary shares to IFC.
With this overwhelming approval, the coast is clear for FCMB to acquire the rescued Finbank based on the terms and agreement spelt out in the transaction implementation agreement (TIA) between both banks.
A joint letter from the Chairmen of the Boards of the Directors of both Banks highlighted the scheme of arrangement between both banks which reads in part:
“The scheme of arrangement for the acquisition of Finbank provides for the reorganisation of Finbank’s entire share capital by the reduction and cancellation of the entire issued share capital and corresponding of the authorised share capital of Finbank.
“The AMCON shall then restore Finbanks’ current negative shareholder fund to zero. FCMB through a special purpose vehicle FIL will then acquire the scheme shares from AMCON”.
Group Managing Director of FCMB, Mr. Ladi Balogun said, “The acquisition of Finbank will provide considerable benefits and opportunities to the shareholders, customers, staff and other stakeholders of both banks.”
Meanwhile the approval of Finbank shareholders for the acquisition deal came via a resolution in which they unanimously endorsed the scheme of the two Banks by total shares of 5, 631,856,470 representing 85.7% of the total vote cast in the court-ordered Meeting/EGM held inAbuja, on September 29, 2011.
According to the Chairman, Dr. Theo Chike Osanakpo, SAN, “The result has brought us to the conclusion of the business of the court ordered meeting”.
This result, he said would be submitted to the Federal High Court to enable it sanction the scheme.
With this overwhelming positive support, the shareholders have authorized the business combination of both financial institutions; a move considered important in salvaging shareholder value.”
It is also considered that by this support, the Bank has met the Central Bank of Nigeria (CBN) 30th September recapitalisation deadline given to all the intervened Banks. The shareholders vote of confidence on its board has created an opportunity for customers of the Bank to be part of bigger financial institution. The combined entity of FinBank and FCMB will emerge as the 8 largest financial institutions in the count