StateWest Credit Society members have voted in favour of demutualisating their institution, paving the way for the proposed merger with listed suitor Home Building Scoiety Ltd.
StateWest Credit Society members have voted in favour of demutualisating their institution, paving the way for the proposed merger with listed suitor Home Building Scoiety Ltd.
Just over half of StateWest's membership voted on the issue, with nine out of 10 of the 30,366 votes cast favouring the end to mutual status.
According to the credit society's constitution, a minimum of 25 per cent of members were required to make the vote count, with 75 per cent of those voting needed to support demutualisation for it to go ahead.
The demutualisation was opposed by a group of members, some involved in the founding of the society in the early 1960s to offer an alternative to banks which were regarded as unfriendly to consumers in those times.
Lew Louthean, the founding general manager of CSA Credit Union that merged with API Auscom Credit Society in 1995 to form StateWest, said those opposed to the demutualisation and merger would look at legal avenues to challenge the validity of today's vote.
StateWest CEO Greg Wall said that the positive vote indicated strong support from members for the demutualisation.
"I think it is a fairly emphatic result," Mr Wall said.
Mr Wall said the credit society had carefully checked the legal requirements for the demutualisation process and was confident the result would stand.
"We will move on to the next stage, which is the clear preference of the members."
The next step in the planned merger process is in the hands of Home's shareholders who will vote on the proposed merger with StateWest on Monday, November 28.
If it gets the green light from Home shareholders, the merged business will have 36 branches, 400 staff and $3.5 billion in funds under management, representing about 5 per cent of the WA market.
WA Business News subscribers can read what Tim Treadgold had to say in his popular Briefcase column on the merger back in September by going to: http://www.wabusinessnews.com.au/archivestory.php?/13/30013/Tim-Treadgold-Briefcase-Filling-in-the-gaps-on-BHP-Billiton
Below is the StateWest release
STATEWEST MEMBERS VOTE OVERWHELMINGLY IN FAVOUR OF DEMUTUALISATION
Strong Voter Response Puts StateWest One Step Closer Towards Merger with Home
StateWest Credit Society today announced that its Members have voted overwhelmingly in favour of demutualisation, one of the first steps in the proposed merger with Home Building Society Ltd.
30,366 ballot votes were counted (52% of the Members of StateWest) with 90% of these voting in favour of demutualisation.
StateWest Chairman Trevor Halliday said the voter turnout on the demutualisation vote had been extraordinary.
"The voting participation of our Members far surpasses any previous ballots held by StateWest on issues such as director elections and sends a strong message that Members believe the proposed merger with Home is in StateWest's best interests," said Mr Halliday.
"We are thrilled with the voter turnout and we hear very clearly the wishes of our Members."
Mr Halliday said Member participation in the demutualisation vote was also far above that of similar ballots held by other Australian credit societies, a factor he attributed to the strength of the proposal before StateWest Members.
In August, Home and StateWest announced an in-principle agreement to merge the two organisations to create a strong new Western Australian-based financial institution.
The StateWest demutualisation was the first step in the merger process whereby StateWest Members were asked to approve a change of status of their organisation ahead of a later vote on the merger itself.
For demutualisation to be effected, 25% of StateWest Members were required to cast votes on the demutualisation resolution and of these 75% needed to vote in favour of demutualisation.
StateWest Chief Executive Officer Greg Wall said the demutualisation vote was clear and emphatic.
"We are very pleased with the overwhelming number of Members who exercised their right to vote on the proposal. This is truly a democratic process and a clear cut result," said Mr Wall.
"We now look forward to moving onto the next stage of the transaction and putting the merger proposal before both StateWest Members and Home shareholders."
The next step is approval by Home shareholders at the AGM on 28 November.
Following this in late December is the despatch of the formal merger documentation, where StateWest Members will be asked to have a final say on the merger by either voting by proxy or attending the Scheme Meeting and AGM to be held on 31 January 2006.
Key Terms and Conditions of the Merger
Under the proposal, Home will acquire the shares in StateWest by way of Scheme of Arrangement through the issue of 15.17m shares. The shares will be distributed equally to StateWest Members once all approvals and merger conditions have been met. In addition StateWest Members will also receive a special dividend from StateWest.
At the current market levels the amount each StateWest member would receive in shares and dividend is worth approximately $3,163.74 (based on a 45 day volume weighted average price for Home shares as at the close of trade on 21 November 2005).
The remaining conditions to completion of the merger include:
- Approval of StateWest Members to the Scheme of Arrangement in accordance with the Corporations Act;
- Approval of the shareholders of Home; and
- Regulatory and Court approvals.
The indicative timetable for completion of the transaction is as follows:
28 November*
Home AGM, including seeking Home shareholder approval of merger
Mid December*
Court approval and posting of merger documentation and AGM notice to StateWest Members
31st January*
Meeting of StateWest Members (and AGM) to approve merger
Early February*
Second Court Hearing to approve Scheme
21 February*
Implementation of merger proposal, issue of Home shares and payment of special dividend
the full press relase issued by opponents of the move is posted below:
MEDIA STATEMENT
LEGAL CHALLENGE TO STATEWEST / HOME MERGER
22 November 2005
Former top StateWest Credit Society officials are taking legal advice on a challenge to the mutual's proposed merger with Home Building Society and becoming a bank.
Concerned StateWest members are planning court action claiming defects in the merger process, including inadequate disclosure of the salary and benefits of StateWest officers who will move to Home after the merger.
Former founding chairman of StateWest, Pat Kirwan said StateWest had failed to adequately disclose, just two years after members had agreed to new disclosure regulations in StateWest's constitution.
Mr Kirwan said StateWest had not properly disclosed the salary and benefits the current StateWest CEO, Greg Wall, would receive as managing director of the merged entity. He also claims additional benefits of other StateWest directors who will join the Home board have not been properly outlined.
"By rights any vote should be invalid as it is clear that StateWest members have not been given the opportunity to make a fair, properly informed decision," Mr Kirwan said.
"StateWest's constitution clearly states that procedures must be correctly followed especially with regard to the benefits that will be received by those people who are promoting the change.
"StateWest needs to clearly disclose these figures - it hasn't happened, and it's not good enough.
"After all, these are among the people StateWest members are relying on for a recommendation about the merger proposal and it is critical that their own personal interests should be disclosed properly."
Mr Kirwan said a large number of StateWest members were disappointed that StateWest's AGM was moved until after completion of the postal ballot on the merger.
"By shifting the date of the AGM, StateWest deprived its members of an opportunity for an open forum and discussion on the proposed merger - which is not in the spirit of mutuality where members have a real say."
Lew Louthean, the founding general manager of CSA Credit Union that merged with API Auscom Credit Society in 1995 to form StateWest, said StateWest had made statements about the value of the Home shares StateWest members would be receiving, without a balanced presentation of the risks that the market value of the shares could fall after the merger.
"The advertisements encouraging members to vote have been quoting recent share prices for Home, which have been increasing, but they don't mention the risk of the price going down if a lot of ex-StateWest members sell their shares," Mr Louthean said.
"Members probably don't realise that there is no guarantee of the return the advertisements are quoting".
"Another issue that has not been made clear is that once they become shareholders of Home, members will not be able to stop a future takeover of Home by a major bank.
The record of consolidation in the banking industry shows that this is likely to happen."
"Just look what happened to Perth Building Society (PBS) - they demutualised to create a local bank and were shortly taken over by Westpac.
"I am sure PBS members didn't expect to be sold out to a major bank.
"It's just like history repeating itself.
"If the planned merger proceeds Home will become a profit driven bank, forced by the market to maximise returns to investors - and this flies directly in the face of what a credit union is - a member focused, member owned, democratic mutual organisation.
"Members need to fully understand that a 'yes' vote for the StateWest/Home merger is a vote for less choice, nine less branches in the community, and less service to members," Mr Louthean said.
A fighting fund has been established and concerned members can pledge support by contacting Pat Kirwan on 0414 266 254.
