FIMBank issues new shares,
35.6 per cent shareholder discount
Following its successful acquisition London Forfaiting
Company, Malta Stock Exchange listed First International Merchant Bank
is now taking strides toward it goal - to develop FIMBank into an international
player in the Trade Finance and Forfaiting business.
In a statement released this week, the Bank said it aims to achieve
the aim by expanding the Banks operations further by developing
and growing LFC, and by building a network of factoring joint venture
companies in a number of jurisdictions in conjunction with local partners
and possibly other international institutions of high repute.
As a first step in this direction, the Board on Sunday approved a rights
issue, which will increase the Banks issued share capital by USD15
In recognition of the support and loyalty expressed by its existing,
the Bank said in a statement, it is offering the new shares at USD0.75
per share - representing a 35.6 per cent discount on the trade-weighted
average price during the last six months of USD1.165 per share.
Details of the rights issue are as follows:
20,000,000 shares of a nominal value of USD0.50 each;
offered at a price of USD0.75 per share;
Offered on the basis of ten new shares for every 23 existing
Shareholders qualifying for the rights will be given the option
to transfer their rights in part or in whole in favour of a third party.
The new shares will be issued pursuant to and in accordance with article
5 of FIMBanks Articles of Association, on a pro-rata basis to
shareholders on the Companys Register of Shareholders as at close
of business on Wednesday, 12 November.
The Chairman of the Board of Directors, who also is a founder shareholder
of FIMBank and currently holds, whether directly or through companies
controlled by him, an aggregate 40.22 per cent of the total issued share
capital has indicated to the Board his willingness to take up all the
rights being offered to him and such companies.
An Offering Memorandum, together with an Entitlement Letter and an Acceptance
or Transfer Form, will be sent to eligible Shareholders shortly.
The acquisition of LFC had been somewhat touch and go over the last
weeks, after a rival bid had appeared. But it was back-slapping all
around on Friday when FIMBank announced it had emerged with the keys
to LFC, a world leading forfaiting company. Incorporating LFCs
operations into FIMBank is expected to be lucrative for the now quickly
growing local trade finance bank.
The deal is significant in a number of ways: FIMBank has now placed
itself in a position to become the worlds leading bank dealing
in the area of forfaiting; FIMBank shareholders can now prospectively
look toward higher dividends and a growing value for their shares; FIMBank
has now marked itself as the first Maltese business to purchase an internationally
listed firm; and the bank has also become the first Maltese bank to
purchase a foreign bank.
FIMBank will be carrying out a major restructuring exercise and will
accordingly be transferring much back office administrative operations
to Malta, where the now merged companies nerve centre
will be located.
FIMBank had initiated a takeover bid on 22 July, which was later seized
upon by Resurge, a company run by rival bidder British corporate raider
Jonathan Rowland Rowland. However, FIMBanks hard cash offer proved
more attractive than Resurges share offer to LFC shareholders,
65 per cent of which have put their stamp of approval on the FIMBank
FIMBank Executive Vice President and internationally renowned forfaiting
expert Magrith Lutschd-Emmenegger referred to the deal as a "paramount
FIMBank has paid GBP30.9 million for LFC - a tidy sum indeed, but the
return on its investment is expected to greatly overshadow the expenditure.
FIMBanks growth potential is now 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 has now successfully
placed itself in pole position to do just that.
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 starts
LFC operations 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 reach a break even point by the end of the year.