IL&P will be in full state ownership by end of July
Legal action by shareholders won't block €3.4bn takeover
IRISH Life & Permanent (IL&P) will be in complete state control by the end of July, the company said last night. The news left furious shareholders considering legal challenges.
Yesterday Irish Life & Permanent said the Government would own more than 99pc of the company once the Department of Finance pumped €3.4bn in fresh cash into the banking and insurance group.
The news came as the board of directors called an extraordinary general meeting (EGM) for July 20 to clear the way for the state takeover.
Shareholders attending the July 20 meeting will be asked to vote on the recapitalisation plans, including the State's capital injection. Accepting the plan means shareholders voting themselves out of existence so the proposal is likely to be rejected.
However, the company said if shareholders rejected the proposal it expected the Government to push ahead with the plan regardless, using the sweeping powers available under the Credit Institutions Stabilisation Act brought in last year. That will mean a trip to court for an order under the act, granting power to overturn the results of the EGM.
The shareholder that has led a campaign to try to block the State's plans said nationalisation of the bank was "malicious and wrong" and compared Finance Minister Michael Noonan to Zimbabwe's Robert Mugabe.
"This is a viable, significantly overcapitalised company and there is no need for this dramatic action," said Piotr Skoczylas of Scotchstone Capital Fund,
He said shareholders would legally challenge the State once it sought an order from the courts and warned of protests from 100,000 small investors with shares in the company.
A spokesman for Mr Noonan said the State would seek control of the company because it was the only source for the €3.4bn. "The State has offered to provide the capital but only if that investment is protected by taking ownership of the company," the spokesman said.
The State's capital injection will not affect the sale of Irish Life, the company's life assurance business. It is understood the company will issue an information memorandum relating to a trade sale of the company in the coming days.
IL&P needs to raise €3.4bn by July 31 to meet capital requirements set by the Central Bank and has failed to find private sector investors to plug that funding gap.
The EGM is separate to an EGM that has already been demanded by a group of shareholders opposed to the State's plans for IL&P.
That meeting must be held by the end of August and was called to try to prevent the recapitalisation taking place.
The EGM demanded by the shareholders will go ahead even though the EGM called by the directors will have been held in the meantime, and despite the likelihood of full state control by the time shareholders' own motions can be debated.
Mr Skoczylas says there is no economic need to recapitalise the bank by the end of July and wants the timetable extended.
The July 31 deadline for recapitalising IL&P was set by the troika of the ECB, IMF and European Union that are managing the Irish bailout.
Shares in IL&P closed at 6 cent yesterday.
The company will be the fifth Irish financial institution to come under government control. Bank of Ireland, which is 36pc owned by the State, is trying to raise enough capital from private investors to avoid majority state ownership.