'Strong possibility' of recapitalisation at IL&P being rejected

THERE IS a “strong possibility” today’s recapitalisation resolution at the Irish Life & Permanent (IL&P) egm will be rejected, according to a source close to the company.

Shareholders are being asked to vote at 11.30am on whether to accept the Government’s €3.8 billion recapitalisation programme, which will wipe out shareholder interests and leave the State with a 99 per cent share in the bank.

Opposition to the resolution is being led by Malta-based investment fund Scotchstone Capital, which has publicly declared its opposition to the proposed recapitalisation and has been canvassing support to reject the motion.

Last week it offered to sell its shares to the Government at 90 cent each, a massive premium over the current price of 5 cent. The group has already succeeded in tabling four additional resolutions to be addressed at the egm, which include the appointment of Piotr Skoczylas of Scotchstone Capital as a director of the company, and the appointment of an investment bank to assess other recapitalisation options. The group is calling for postponement of the recapitalisation deadline from July 31st to December 31st.

It is understood there is now a 50-50 chance the resolution will be rejected, given only about 30 per cent of shareholders are likely to vote. Of those voting at the egm, many will have done so already by proxy, as such votes had to be submitted by Monday morning.

If the recapitalisation resolution is defeated, there is a correlating strong possibility the four additional resolutions put forward by the opposing shareholders will be passed.

The board of Irish Life has 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”. It does not endorse the additional resolutions.

If the recapitalisation does not get the go-ahead today, it is likely the Minister for Finance will use his separate legal powers to implement a recapitalisation, although Mr Skoczylas has said he will challenge the Government in any such proceedings.