The Minister for Finance has secured a court order directing Irish Life & Permanent to take steps to achieve, as soon as practicable, the sale of Irish Life Ltd as part of efforts to achieve the proposed €4 billion recapitalisation of the group.
The President of the High Court, Mr Justice Nicholas Kearns, today granted the Minister's application, made under the Credit Institutions Stabilisation Act, for the directions order.
The judge said he had received the legal documents at 8am this morning and noted the overall intention of selling Irish Life was to stabilise and reorganise IL&P.
IL&P had consented to the directions order being made, said David Barniville SC, for the Minister.
The order requires IL&P to take steps to offer Irish Life Ltd for sale, whether through an initial public offering (IPO) or private sale, as soon as practicable and no later than October 2011.
Mr Barniville said the background to the application was the precarious financial position of IL&P which was reliant on State support and support from the European Central Bank. The market needed to be tested to see whether a public offering or private sale of Irish Life was best, he added.
The Minister's application was heard in public and grounded on an affidavit of William Beausang, an Assistant Secretary General in the Department of Finance. Parts of Mr Beausang's affidavit were redacted or blacked out on grounds those sections contained commercially sensitive information.
IL&P, which had avoided a Government bailout, was ordered to raise €4 billion by the Central Bank last March following stress tests.
The group is selling Irish Life to raise about €1.5 billion and buying back debt to raise further cash, but will still require about €2.5 billion from the State, pushing the group into Government control given its €24 million market value.
The order relates to plans, already announced by the group in March, to dispose of its life and pensions unit through a possible IPO or sale of some or all of the business.
It is believed that the decision to obtain the order may be linked to concerns that bondholders of the group could characterise the sale of Irish life - which represents about two thirds of the business - as a default.
The decision to apply to the court for the order is not believed to be connected to the current proposals by a group of dissident shareholders to force an egm to challenge the proposed €4 billion recapitalisation of the group.
The group, which is led by Malta-based investment firm Scotchstone Capital, claims to have more than 12 per cent of the group’s share capital, well in excess of the 5 per cent required to requisition an egm.
The direction order will have effect five working days from today.
Having been one of the few Irish financial institutions to avoid state support, IL&P was ordered to raise €4 billion by the Central Bank last March following stress tests.
While the group is selling Irish Life to raise about €1.5 billion and buying back debt to raise further cash, it will still require about €2.5 billion from the State.
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