FIMBank seeks approvals
in promising LFC takeover bid
Malta-based First International Merchant Banks bid
to become one of the worlds leading banks in offering trade finance
by next year is unquestionably one of, if not the most exciting venture
underway by any of the companies listed on the Malta Stock Exchange.
Speaking at a shareholders briefing this week, FIMBank officials
gave a detailed breakdown of how the goal stands to be accomplished,
explaining that the banks friendly takeover bid of London Forfaiting
Company Ltd is progressing in line with projections.
As reported in this newspaper last Wednesday, FIMBank broke the news
last week that it had placed an offer for London Forfaiting Company
Ltd, the leading brand name in the business of trade finance.
The mood among FIMBank shareholders assembled at the information session
was positive yet inquisitive, particularly so in light of the enormous
potential for growth the prospective acquisition offer presents, coupled
with further growth potential for FIMBanks share price.
Indeed, if the deal goes through the potential is great and wide-ranging.
The London Forfaiting Company is recognised as the market leader in
forfaiting, with what is considered to be the industrys best client
base of exporters and importers.
LFC at present employs a multi-national workforce of 63 professionals
and has marketing offices in eight countries representing a well-oriented
global network that FIMBank is looking to capitalise upon, as well as
the LFC brand name which carries a certain amount of clout in international
But while FIMBank is seeking entry into the major leagues of trade finance,
it is, not by any stretch of the imagination, a stranger to the arena.
In fact, FIMBank has always been active in trade finance, which has
consistently been its core business. The bank has also had aspirations
of becoming a player of global proportions and, even before the proposed
takeover of LFC, had allocated funding to increase its capacity in this
respect - funds that are now being used to finance the LFC deal.
If the bid is successful, FIMBank expects the takeover to have a positive
impact on its profits, however with a bank official commenting this
impact would not be felt in the first half year of merged operations,
but that the bank could expect tangible results in the following six
But, the deal has not yet been finalised and a handful of hurdles remain.
First of all is the possibility that someone else might still better
FIMBanks initial offer. Secondly FIMBank is awaiting regulatory
approval from the Malta Financial Services Authority but tentative indications
are that this will be forthcoming.
The proposal also needs to be greeted by a 90 per cent approval from
LFC shareholders so as to give FIMBank the ability to carry out what
is called a white wash exercise - effectively delisting
the company from the London Stock Exchange. So far, a FIMBank official
explained Monday. The bank has received approval from 40 per cent of
LFC shareholders, which includes a 100 per cent agreement from LFCs
board. The 90 per cent approval has to be given within 60 days of the
initial offer and FIMBank believes this approval will present itself.
Finally, FIMBank is awaiting the final results of a due diligence exercise
being carried out by FIMBanks financiers for the takeover
Bank of America NA London, which had, in what could be considered a
big vote of confidence, given its initial approval to finance the deal
within 72 hours.
While LFC is the closest a forfaiting company can get to being a household
name, it is neither it a stranger to adversity. It had, in fact, run
into troubled waters in 1997 during the emerging markets crisis of 1997
when the Asian, Brazilian and Russian markets it was involved in had
LFC, despite its problems in the past, still enjoys a very well established
name in the market. All its debts have been repaid and FIMBank would
start with a clean slate in this respect.
The company emerged from the turmoil with its forfaiting book in very
good shape. LFCs current running costs are over its profit levels,
but FIMBank expects to bring operative costs down to a profitable level
within three to four months after acquisition and by 2004 these would
no longer be a drain on resources, but instead augment them.
On 30 September LFC announced it was looking for a suitable partner
to support the growth of the company and has scaled back its business
substantially over recent months to increase its value to a potential
FIMBank has offered LFC GBP30.9 million share capital at a premium of
119 per cent over a closing price of 13.5 pence per share on 27 September