STATE-CONTROLLED Irish Life and Permanent was ordered by the High Court to sell Irish Life to the State for €1.3 billion, which will be used to complete the recapitalisation of Permanent TSB as directed under the EU-International Monetary Fund programme.
The court ordered the sale on an application from the Minister for Finance to finalise the €4 billion recapitalisation of Permanent TSB before the separation of the banking and life businesses.
The deal, once executed after April 13th and completed by June 30th, will push the State’s bank recapitalisation payouts from €62.4 billion to €63.7 billion.
Alan Cook, chairman of Irish Life and Permanent, said the company’s “focus now must be on minimising any further call on the Irish taxpayer and maximising the potential to build sustainable, customer-focused businesses”.
Even though the State already owns 99.5 per cent of Irish Life and Permanent, it is buying the life assurer and subsidiaries to recapitalise Permanent TSB before a deadline of the end of June that was set under the EU-IMF programme.
The sale includes fund manager Irish Life Investment Managers and the group’s 30 per cent stake in general insurer Allianz.
The deal, which was expected, was agreed after a trade sale of the company fell through last year.
The Government plans to sell Irish Life to recoup most or all of the €1.3 billion it has paid as soon as market conditions improve.
The price, Irish Life’s net asset value in June 2011, corresponds with “the increase in valuation multiples for a selected peer group in the period since 25th November 2011” to the highest bidder’s offer in the sale process, the company said in a partly redacted affidavit.
High Court president Mr Justice Nicholas Kearns made the court order under the emergency banking legislation, Credit Institutions (Stabilisation) Act 2010.
David Barniville SC, for the Minister, said the proposed sale was in the best interests of the State, the company and the shareholders.
The court heard that ratings agency Standard and Poor’s had indicated that separating Irish Life from Permanent TSB would result in an upgrade in its credit rating.
Shareholder approval is not required to approve the transaction.
A number of shareholders are challenging the requirement to recapitalise the company, which has wiped out their investments.
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