Lombard in talks to cross Tasman

ROSS GIBLIN/The Dominion Post

DECISION-MAKING: Michael Reeves, left, will stand down, and Wayne Miller, right, will be Lombard Insurance Group chief executive.

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Lombard Group is proposing to become Australian, taking war-weary Kiwi shareholders with it.

A special shareholders' meeting in Wellington yesterday passed recommendations to make a reverse takeover offer for Perth-based insurance company Australian Consolidated Insurance Ltd.

ACIL manages A$80 million (NZ$98.4m) of insurance premiums from offices in Perth, Sydney, Melbourne, Brisbane, Auckland and Hamilton.

ACIL shareholders will be offered Lombard shares for their stake in the company, with a 90 per cent acceptance requirement for the deal to go through.

Lombard chairman David Wallace said the board had spent a long time thinking about the options for the company since its finance arm went into receivership.

"The key for us was that investors were able to realise some value from the listing we had."

Lombard Group shareholders, who have endured the collapse of the company's finance and investment arm, have an option to sell their shares back to Lombard with a buyback option offering them 1.2c per share.

Lombard Finance went into receivership almost two years ago owing more than 4000 investors $127 million. Investors were offered a payout of 6.5c in the dollar by receivers PricewaterhouseCoopers in December.

Lombard Group's share price was at 6c yesterday, making the buyback offer a fraction of the market rate but with zero liquidity, in other words no one wanted to buy the shares, it was seen as the only option to sell out.

As part of the deal Lombard chief executive Michael Reeves and Mr Wallace would stand down from the board, ending their association with the company. Independent director Bill Jeffries would be chairman.

Chairman and chief executive of ACIL Wayne Miller, who will be the chief executive of the newly formed Lombard Insurance Group should the deal go through, hoped Lombard shareholders stayed in the company.

He said gaining approval to raise another NZ$10 million through a share issue meant the new company would stay on an acquisition footing.

Five years old with 72 staff and 13 acquisitions under its belt, ACIL had acquisition experience and had picked up three New Zealand entities since 2005, Mr Miller said.

He had been "waiting in the wings" for the global financial crisis to pass and now was that time.

"I am very bullish about where the financial markets are going."

He said ACIL's expertise in the Australian market where regulation of financial advisers had a "profound impact" would set them up well to take advantage of opportunities a similar shift in New Zealand would bring about.

The takeover offer is open for a month, closing on April 10.

- © Fairfax NZ News