Regulator was 'getting nervous' of FBD before asset and bond sales
FBD Holdings chief executive Fiona Muldoon said that the financial regulator was 'getting nervous' about FBD before it entered into a €70m agreement to sell a bond to Canadian financial holdings company Fairfax and sell its real estate assets.
Shareholders in FBD Holdings yesterday agreed to the sale of its 50pc stake in Property and Leisure to Farmer Business Developments for €48.5m.
But management came under pressure from the floor over recent losses.
Shareholders backed the proposal to sell hotels at an extraordinary general meeting in the Irish Farm Centre yesterday where Ms Muldoon refused to fully rule out office closures.
"Some of the branch managers have said 'you know, we're hearing rumours'. I have been very clear, we will have to take cuts. But I have been very clear that this first phase is €7m, which is about 100 people and that the first phase does not involve closing offices," Ms Muldoon said.
"Office closures did not form part of the cost-cutting measures outlined at the time of the interim results. However, cost cutting is an ongoing process and in a highly competitive market with rising claims there can be no sacred cows."
An 89pc majority of FBD Holdings shareholders agreed to the sale of its hotel and leisure business, which consists of two Spanish properties, La Cala Resort and Sunset Beach Club, as well as three Irish hotels, The Tower Hotel, Faithlegg House Hotel and Golf Course both in Waterford, and Castleknock Hotel in Dublin.
Fairfax, headed up by Prem Watsa, invested in a convertible bond paying 7pc a year.
When pressed by a shareholder about Mr Watsa's interest in FBD's bond, chairman Michael Berkery said that previous dealings he has had with him have been "honourable".
"Capital has got to be rewarded, wherever it comes from and all I can say about Prem Watsa is that all of my dealings with him and all of our dealings with him and the company's dealings with him have been most honourable and above board," Mr Berkery said.
When the floor was open to shareholders, Phil Healy asked whether the company's executive staff would be taking a cut in their wages.
"Will the top people, the top executives and the top people in the board, will they take a drop in their salaries? I said at the last AGM that these people were only getting more money when we're losing money," he said.
Mr Berkery responded to the comment saying that they had taken a 30pc cut six years ago.
"Everybody took a 30pc cut in fees and salaries and payments. Any gain we get for this company we took a 30pc cut in 2009."
Another shareholder, Matt Dempsey, feared the dilution of the company's shareholding after the sale of Fairfax's bond.
"We may well be the anchor shareholder but we will be an anchor shareholder without any power to restrict or fight a takeover of our insurance company," he said.
"The single greatest asset that FBD has is the degree of enormous farmer loyalty and commitment and the recognition by them that an insurance company owned by them and controlled by them is desirable, and that's why it was set up."