FIMBank issues new shares, 35.6 per cent shareholder discount

Following its successful acquisition London Forfaiting Company, Malta Stock Exchange listed First International Merchant Bank is now taking strides toward it goal - to develop FIMBank into an international player in the Trade Finance and Forfaiting business.
In a statement released this week, the Bank said it aims to achieve the aim by expanding the Bank’s operations further by developing and growing LFC, and by building a network of factoring joint venture companies in a number of jurisdictions in conjunction with local partners and possibly other international institutions of high repute.
As a first step in this direction, the Board on Sunday approved a rights issue, which will increase the Bank’s issued share capital by USD15 million.
In recognition of the support and loyalty expressed by its existing, the Bank said in a statement, it is offering the new shares at USD0.75 per share - representing a 35.6 per cent discount on the trade-weighted average price during the last six months of USD1.165 per share.
Details of the rights issue are as follows:
• 20,000,000 shares of a nominal value of USD0.50 each;
• offered at a price of USD0.75 per share;
• Offered on the basis of ten new shares for every 23 existing ordinary shares;
• Shareholders qualifying for the rights will be given the option to transfer their rights in part or in whole in favour of a third party.
The new shares will be issued pursuant to and in accordance with article 5 of FIMBank’s Articles of Association, on a pro-rata basis to shareholders on the Company‚s Register of Shareholders as at close of business on Wednesday, 12 November.
The Chairman of the Board of Directors, who also is a founder shareholder of FIMBank and currently holds, whether directly or through companies controlled by him, an aggregate 40.22 per cent of the total issued share capital has indicated to the Board his willingness to take up all the rights being offered to him and such companies.
An Offering Memorandum, together with an Entitlement Letter and an Acceptance or Transfer Form, will be sent to eligible Shareholders shortly.
The acquisition of LFC had been somewhat touch and go over the last weeks, after a rival bid had appeared. But it was back-slapping all around on Friday when FIMBank announced it had emerged with the keys to LFC, a world leading forfaiting company. Incorporating LFC’s operations into FIMBank is expected to be lucrative for the now quickly growing local trade finance bank.
The deal is significant in a number of ways: FIMBank has now placed itself in a position to become the world’s leading bank dealing in the area of forfaiting; FIMBank shareholders can now prospectively look toward higher dividends and a growing value for their shares; FIMBank has now marked itself as the first Maltese business to purchase an internationally listed firm; and the bank has also become the first Maltese bank to purchase a foreign bank.
FIMBank will be carrying out a major restructuring exercise and will accordingly be transferring much back office administrative operations to Malta, where the now ‘merged’ companies’ nerve centre will be located.
FIMBank had initiated a takeover bid on 22 July, which was later seized upon by Resurge, a company run by rival bidder British corporate raider Jonathan Rowland Rowland. However, FIMBank’s hard cash offer proved more attractive than Resurge’s share offer to LFC shareholders, 65 per cent of which have put their stamp of approval on the FIMBank offer.
FIMBank Executive Vice President and internationally renowned forfaiting expert Magrith Lutschd-Emmenegger referred to the deal as a "paramount transaction".
FIMBank has paid GBP30.9 million for LFC - a tidy sum indeed, but the return on its investment is expected to greatly overshadow the expenditure.
FIMBank’s growth potential is now great and wide-ranging. The London Forfaiting Company is recognised as market leader in forfaiting, with what is considered to be the best client base of exporters and importers in the world.
LFC at present employs a multi-national workforce of 63 professionals and has marketing offices in eight countries – representing a well-oriented global network that FIMBank is looking to capitalise upon, as well as the LFC brand name, which carries a certain amount of clout in international trade circles.
But while FIMBank is seeking entry into the major leagues of trade finance, it is, not by any stretch of the imagination, a stranger to the arena. In fact, FIMBank has always been active in trade finance, which has consistently been its core business. The bank has also had aspirations of becoming a player of global proportions and has now successfully placed itself in pole position to do just that.
While LFC is the closest a forfaiting company can get to being a household name, neither is it a stranger to adversity. It had, in fact, run into troubled waters in 1997 during the emerging markets crisis of 1997 when the Asian, Brazilian and Russian markets it was involved in had crashed.
LFC, despite its problems in the past, still enjoys a very well established name in the market. All its debts have been repaid and FIMBank starts LFC operations with a clean slate in this respect.The company emerged from the turmoil with its forfaiting book in very good shape. LFC’s current running costs are over its profit levels, but FIMBank expects to reach a break even point by the end of the year.