Noonan to take legal action to recapitalise company

IRISH LIFE & PERMANENT EGM:MINISTER FOR Finance Michael Noonan has said he will apply to the courts to recapitalise Irish Life & Permanent, despite shareholders voting down proposals to approve the recapitalisation at an extraordinary general meeting.

Mr Noonan said he had expected shareholders to vote against the proposals but that he had been instructed to recapitalise the company by the end of this month under the terms of the bailout by the European Union and International Monetary Fund.

“I can appreciate and understand the feelings of shareholders because they invested thinking they were in a sound investment and then they’ve almost been wiped out,” he said on RTÉ radio.

“But it all arises from the instructions that we have got to recapitalise the banking system.”

He would have to take “a legal route” to recapitalise the company, he said, after more than 60 per cent of shareholders voted against the recapitalisation.

He said it was premature to comment on his court action.

The company urged shareholders to vote for a Government injection of up to €3.8 billion, meeting the higher capital target set by the Central Bank after the stress tests of the banks in March.

This will wipe out shareholders’ interests, leaving the State with a stake of more than 99 per cent.

Shareholders stood to applaud when the first of three company proposals were voted down at an acrimonious egm in Dublin.

Four proposals tabled by dissident shareholders, led by Malta-based investment firm Scotchstone Capital, were voted through by more than 60 per cent of the shareholders.

Alan Cook, chairman of Irish Life & Permanent, told reporters after the meeting that the shareholder vote was “disappointing” but “not a surprise”.

“This is not unexpected when you consider what shareholders were being asked to vote on.

“It is a protest vote and they are entitled to make that protest vote,” he said.

Shareholders elected Scotchstone managing director Piotr Skoczylas to the company’s board.

“The official and legal position is that this company, the shareholders have decided, will not be recapitalised by the 31st of July,” Mr Skoczylas told shareholders.

“The only way it can happen by the 31st of July is if Minister Noonan goes to the High Court to get a direction order to wipe out all the shareholders, which, as I said previously, we will oppose.”

Shareholders voiced anger that the company had been told to raise €250 million following stress tests last year but that this had risen to €4 billion following the more severe stress tests last March.

Mr Cook said he would raise the objections of shareholders when he met the Minister.

“I will be taking back the views that have been expressed to me as strongly as I can to the Minister to make sure he understands the strength of feeling and the extent to which they’re affected,” he said.

The EU approved the recapitalisation of Irish Life Permanent with up to €3.8 billion in State funds. Some €2.7 billion will be injected by the end of this month and the remaining €1.1 billion in the third quarter following a debt buyback from junior bondholders and the sale of Irish Life.