Irish Life shareholders reject capitalisation plans Carmel Crimmins, 14:16, Wednesday 20 July 2011 DUBLIN (Reuters) - Shareholders in Irish Life & Permanent (IL&P) voted against state plans to take over the bancassurer on Wednesday, meaning the government will have to go to the High Court to recapitalise the group as agreed under an EU-IMF (Berlin: MXG1.BE - news) bailout. Faced with a near 4 billion euros $5.7 (3.5 billion pounds) capital hole and heavily reliant on emergency central bank funding, IL&P's board had 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 group of dissident shareholders, led by Malta-based investment fund Scotchstone Capital, successfully challenged the board's recommendations. "It's a protest vote and they are entitled to make that protest vote," Chairman David Cook told reporters after a special shareholders' meeting. "I do fully understand how they feel." Shareholders representing just 28 percent of the shares voted, but of those who participated nearly two thirds rejected the state's plans. IL&P has to be recapitalised by the end of July under the terms of an EU-IMF bailout of the banking sector and the sovereign and Finance Minister Michael Noonan can push through the recapitalisation without shareholder approval by applying to the courts. "We have no choice but to recapitalise," Noonan told state broadcaster RTE. "There are options which would allow the government to go ahead following a legal route to recapitalise, but it is premature to get into the details." Piotr Skoczylas of Scotchstone Capital, which has led the dissident shareholders in response to the vote, told Cook he needed to tell Noonan to review his plans. "The official and legal position is that this company, the shareholders have decided, will not be recapitalised by the 31st of July," he said, to sustained applause from around 300 investors. "The only way it can happen by the 31st of July is if Minister Noonan goes to the High Court to get a direction order to wipe out all the shareholders, which, as I said previously, we will oppose." Skoczylas has spearheaded the campaign against the recapitalisation plans and four resolutions tabled by him won shareholder approval, including his appointment as a director of IL&P. STATE SWOOPS 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 (Berlin: IIK.BE - news) 's enterprise securities market after its planned delisting from the main indices in Ireland and Britain. 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, IL&P's share price has collapsed from 23 euros hit in early 2007, when Ireland's infamous property bubble was at its height, to just 5-1/2 cents currently, giving it a market value of around 13 million euros. 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 (Irish: BIR.IR - news) likely making it a clean sweep if its 1.91 billion euros rights issue fails to attract sufficient interest this month. (Reporting by Carmel Crimmins; Editing by Hans-Juergen Peters and Mike Nesbit) http://uk.finance.yahoo.com/news/...t-685667739.html?x=0&.v=1
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