Shareholders say €1.3m sale of IL&P division undermines company
THE proposed €1.3bn sale of Irish Life and Permanent's life assurance business - the Irish Life Group - to the Minister for Finance undervalues the company's crown jewels, the High Court heard today.
The claim was made on the first day of a challenge brought by Irish Life shareholders aimed at setting aside approval granted by the High Court last March for the Minister for under Section 9 of the Credit Institutions (Stabilisation) Act 2010, allowing Minister Michael Noonan to purchase Irish Life from the bank.
The Minister, who opposes the action, says sale is part of the recapitalisation of Irish Life and Permanent (ILP) as required by the Central Bank, the EU Commission, the IMF and the ECB (The Trioka).
The Minister also claims there is an urgency in the case as the recapitalisation must be completed by the end of June or the bank could face sanctions. ILP, which is a notice party to the action, also opposes the proceedings.
In their action, the shareholders of ILP's holding company, Irish Life and Permanent Group Holdings PLC - Gerard Dowling, Padraig McManus, Piotr Skoczylas, Mr Skoczylas's Malta-based company Scotchstone Capital Fund Limited, J Frank Keohane, Georg Haug, John Paul McGann and Tibor Neugebauer - want the court's direction orders of last March set aside.
They are seeking to have the order set aside on grounds including the Minister's direction, made under Section 7(2) of the 2010 Act, was unreasonable and invalidated by errors of law.
It is further claimed the direction order illegally forces ILP to sell a very valuable asset at the undue expense of the ILPGH shareholders and for the benefit of the Minister, and that the order was instigated without adequate consultation and proper observation of fair procedures.
The Minister denies all of the shareholders claims and says no grounds have been identified that would justify the direction orders being set aside.
The Minister claims the proposed sale will result in the complete separation of ILP's life assurance and banking businesses. It is claimed by the Minister that the deal would benefit ILP by €1.3bn and was in the best interest of the state, the company and the shareholders.
If ILP is not recapitalised by the end of June it faces sanctions, including that the financial Regulator may revoke its licence to operate as a credit institution, and undermine confidence in the banks' financial position, it is claimed.
That it is also claimed could put 1,800 jobs at risk and result in the calling in of the government guarantee of €8billion of the bonds issued by ILP. The Government owns more than 99.5pc of Irish Life & Permanent after injecting €2.7bn into ILP in July of last year. That resulted in the shareholder's equity in ILPGH being diluted from 100% to 0.3%.
Mr Justice Michael Peart said if the Minister is right there is an urgency in have the case determined before the end of June. He said he was prepared to do what ever possible to ensure the court was in a position to rule on the matter before the June 30 deadline.
Opening the case, Mr Skoczylas, who is representing himself, told the court he and other shareholders rejected the Minister's claimed that the shareholders lack the legal standing (locus standi) to bring their challenge against the direction order.
The sale undervalue the value of Irish Life and the Shareholders were losing out, he said.
It did not matter how much or how little the shareholders of ILPGH have of the company. Any attempt to sell the crown jewels of the company at below their market value affected the value of their shares, he submitted.
As the interests ILPGH's 130,000 other shareholders are affected by any proposed sale of more than 75pc of the company's assets they have the right to bring a challenge to the Minister's direction order, he added.
Separately the Judge ruled on a number of preliminary issues dismissed an application by the shareholders to have the court consider their claim that part of the 2010 Act is unconstitutional.
The Judge, agreeing with submission made by both the Minister and the company, said that his hands were tied on the matter the President of the High Court had previously ruled that the matter could not be considered in the proceedings before him. The attempt to amend the case to contain the constitutional challenge had came too late in the day.
The shareholders, he added, were not precluded from challenging the constitutionality of the Act in other proceedings. The Judge also dismissed the shareholders application to be provided with certain documents by the Minister and ILP, as the Judge deemed they were not necessary.
The case continues.