FIMBank to extend LFC offer for
an additional week as rival bid rumoured
By David Lindsay
Malta-based First International Merchant Bank is to extend its takeover
bid for the London Forfaiting Company for an additional week, FIMBank
General Manager Raymond Busuttil told The Malta Financial and Business
FIMBanks historic buyout offer, probably the most exciting venture
underway by a Malta Stock Exchange-listed company, had expired yesterday
afternoon amid the possibility of a rival bid emerging from the woodwork
toward the end of the week.
It is not known at the moment whether the extension comes as a result
of the rumours or in order to allow the Bank time to garner the 90 per
cent LFC shareholder approval it seeks as a prerequisite to purchasing
the international forfaiting house. A 90 per cent approval would open
the way for FIMBank to carry out what is called a white wash
exercise - effectively delisting the company from the London Stock Exchange
and integrating it completely with FIMBanks operations.
As matters stood yesterday morning, FIMBank had secured at least a 52
per cent LFC shareholder approval, while Busuttil commented such approval
had reached "a certain level" without divulging any numbers.
But if the bid does go through, FIMBank stands to become one of the
worlds leading trade finance banks, effectively instilling enormous
growth potential for the Bank and its share price.
However, following FIMBanks initial bid for LFC, well-known British
corporate raider Jonathan Rowland launched his own discussions through
financing company Resurge - with LFCs board, which hold the potential
of bettering FIMBanks GBP30.9 million bid. In fact, it is thought
Rowland, a joint managing director of Resurge, will offer not less than
GBP34 million for the potentially lucrative takeover, if it decides
to capitalise on the opportunity.
In a London Stock Exchange company announcement released on 8 August,
Resurge states, "Resurge remains a potential bidder for LFC despite
the imminent first closing date [yesterday] of the cash offer by FIMBank
LFC. Resurge intends to continue its discussions with the Board of LFC,
its advisors and its shareholders with a view to concluding negotiations
as soon as possible. In the interim LFC shareholders are urged not to
accept the FIMBank offer."
In another statement issued just Monday, Resurge states, "Resurge
intends to review its position in light of the results of the first
closing of the initial offer from FIMBank."
FIMBanks initial offer closed yesterday afternoon and an announcement
on the London Stock Exchange from the London Forfaiting board is expected
this morning. It is thought likely that Rowland will wait to see the
level of support shareholders give the FIMBank offer before making his
bid, but a new offer could be put forward by Rowland as soon as Friday.
If Resurges bid is successful, London Forfaiting
will have to pay a GBP310,000 fee to FIMBank for reneging on its offer.
But if the deal goes through for FIMBank, the potential is great and
wide-ranging. The London Forfaiting Company is recognised as market
leader in forfaiting, with what is considered to be the best client
base of exporters and importers in the world.
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
While LFC is the closest a forfaiting company can get to being a household
name, neither is 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 crashed.
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 they 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 scaled back its business substantially
over recent months to increase its value to a potential buyer.
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