The Minister for Finance has today secured a High Court order to inject €2.7 billion into Irish Life & Permanent (IL&P), effectively nationalising the institution.
The court order takes immediate effect after investors last week rejected the State plan.
"I am satisfied that it is necessary and also satisfied that there has been consultation with the governor [of the Central Bank]," Mr Justice Brian McGovern said in court today.
The €2.7 billion consists of €2.3 billion of ordinary shares and €400 million in other bonds. The company will also raise €1.1 billion from assets sales and junior debt burden sharing, a lawyer for the State said.
Shareholders have five working days to appeal today's decision.
A group of investors that owns more than 20 per cent of the company will oppose the court order, said Piotr Skoczylas, managing director of Scotchstone Capital Fund, which is leading shareholder resistance to the plans.
Mr Skoczlyas, who was voted onto the Irish Life board by shareholders on July 20th, said Irish Life is expected to submit his application for Central Bank approval to join the board tomorrow. "We have five days to oppose the order, and we will oppose it," said Mr Skocylas from Scotchstone's Malta-based office today.
IL&P is now the fifth lender to fall under State control.
Irish Life had made multiple attempts to raise private finance to avoid being nationalised. However, Michael Noonan had said he would apply to the courts to recapitalise the bank, despite shareholders voting down proposals to approve the recapitalisation at an extraordinary general meeting last week.
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.
The EU approved the recapitalisation of IL&P with up to €3.8 billion in State funds. In addition to the €2.7 billion injected, the remaining €1.1 billion is set to come in the third quarter following a debt buyback from junior bondholders and the sale of Irish Life.
Shareholders in IL&P last week rejected plans to inject State funds into the company after three IL&P resolutions to agree the recapitalisation were voted down by shareholders.
The board of Irish Life had previously called on shareholders to approve the capitalisation proposals, favouring an orderly acceptance of the resolution, “given the lack of alternative options available to raise the required capital”.
Additional reporting: Bloomberg
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