It’s official FimBank (UK) Limited, part of Malta’s First International Merchant Bank plc (Fimbank), has succeeded in its takeover bid for London Forfaiting Company (LFC) without having to raise its offer. It has received acceptances from 65.1% of shareholders.
Margrith Lutschg-Emmenegger, executive director at Fimbank, is ecstatic: “We’re extremely delighted that, despite the rival offer for LFC from Resurge, we won the bid. It’s great for Fimbank and as a means for us to grow now. And that’s our intention. We would have grown anyway, but much slower. We now have, with LFC, a great name and good people.
“It’s also great for the forfaiting market. The fact that there was a rival bid for LFC and that Jonathan Rowland of Resurge saw a great future for the forfaiting market and a great fit for his business is also great for the market.”
There was a board meeting on August 29 at LFC, where the new board members from Fimbank were appointed Lutschg-Emmenegger, Fimbank’s chairman Najeeb Al-Saleh and Fimbank’s president Claude Roy. There may be an additional appointment to the board later on. LFC’s chairman, Jack Wilson, and chief executive, Stathis Papoutes, have resigned.
Papoutes previously told GTR that Fimbank’s bid was the best offered so far and was therefore recommended to shareholders. “We’ve been focusing on survival of the company for the shareholders and this recommendation only extends this.”
He adds: “Personally, I”m taking one day at a time and have made no plans for the future beyond LFC. I feel that at 52 I”m too young to retire, so we”ll see!”
The long-awaited news has created a much-needed buzz in the forfaiting market the purchase and sale of trade-related receivables on a non-recourse basis. LFC, listed on the London Stock Exchange, was the doyen of the tightly-knit forfaiting community until 1998 when some overstretches in Russia in particular caused a huge dip in its fortunes. The firm closed a few offices and made a few restructuring changes, but has been forking out around US$500,000 a month for salaries alone, amid a depressed forfaiting market and global economic gloom.
The offer is 29.5 pence for each LFC share, valuing LFC at around £31mn. The offer would be financed by a combination of a short-term bridging loan and Fimbank’s own resources. Following completion of the acquisition of LFC, Fimbank intends, subject to the fulfilment of the relevant English law provisions, to use the cash resources of LFC to repay the bridging loan.
The announcement is interesting for the forfaiting market because of who the bidder is. Fimbank, until a few months ago, was a relatively unknown Middle East-owned Maltese-based bank, with a few positions in trade finance deals in that region and Africa . Then it hired Margrith Ltschg-Emmenegger from WestLB and everyone sat up and took note of this previously unheard of player (see GTR, Mar/Apr 2003, p6). Ltschg-Emmenegger led WestLB’s forfaiting team to global dominance in the market over several years but quit in January as the bank wanted to concentrate on the core forfaiting product rather than cover affiliated areas such as factoring and securitisation.
Lutschg aims to use the LFC brand (which will remain) to build up a global presence for Fimbank in trade finance market. “We want to be global,” Lutschg told GTR during the first round of bidding. “But there would have to be a substantial restructuring at LFC, with some offices having to close. But it is a powerful and respected brand and one we would be proud of having.”