The structure of Irish Life & Permanent Plc

Brendan Burgess

Brendan Burgess

Founder
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I am trying to follow the argument of Piotr Skoczylas of www.ILPshareholders.com

If I understand it correctly...

We think that the overcapitalisatioin is crazy, but even if we accept it.
The Group needs to raise €4 billion
The State is putting in €2.3
The shareholders are putting in €1.7 billion (the value of Irish Life)
so the shareholders should end up owning 43% of the group.

I don't think that this is correct but it depends on the structure of IL& P Plc
If I remember correctly, Irish Life were prevented from buying Irish Permanent PLC because of the 5 year rule. As a result, it was structured as a reverse takeover - so Irish Permanent PlC bought Irish Life Plc.

If Irish Life had bought permanent tsb, then Irish Life could theoretically, appoint a liquidator to ptsb and wipe its hands of it.

But Permanent TSB has an asset called Irish Life.
The shareholders don't own Irish Life. They own shares in Permanent TSB

It is a myth to say that the group is raising €4billion in capital.

The group is raising €2.9 billion in new capital. (presumably from the government) The €1,1 billion from the sale of Irish Life will be just moving it around the balance sheet.

The IL&P shareholders are not actually contributing any new capital.








 
I am not an expert Brendan but isn't IL&P set up as a holding company that consists of both Irish Life and Permanent TSB and this is the entity that shareholders own.
 
Hi Sunny

No, I have confirmed it since that the life company is an asset of the bank and forms part of its capital.

Brendan
 
Like I say Brendan, I am not an expert on equity and shareholdings. This might be of interest to you though. It is taken from a prospectus for a EMTN programme. It should be on their website. Their annual report should tell us but haven't had time to take a look. When they talk about Issuer, they are talking about Irish Life and Permanent Plc.



Irish Life & Permanent Group Holdings plc (“IL&P Group Holdings”)​

The Issuer acted as the Group’s holding company prior to a group reorganisation effected on 15th January,2010 by means of a scheme of arrangement between the Issuer and its members under Section 201 of the Irish Companies Act 1963 (the “Scheme”). Pursuant to the terms of the Scheme, the Issuer became a wholly owned subsidiary of IL&P Group Holdings as at that date. IL&P Group Holdings therefore became the holding company of the Group.

Under the Scheme, the then existing issued share capital (the “Existing Shares”) of the Issuer (other than seven shares, as required under the Irish Companies Acts 1963 to 2009) was cancelled. Upon the cancellation of the Existing Shares, the Issuer applied the reserve arising as a result of the cancellation in allotting to IL&P Group Holdings and paying up in full and at par the number of shares in the Issuer equal to the number of Existing Shares cancelled. The former holders of the cancelled Existing Shares (or their nominees) received in respect of each Existing Share cancelled, one share in IL&P Group Holdings. The cancelled Existing Shares were delisted and the issued share capital of IL&P Group Holdings was admitted to trading on the Official List of the Irish Stock Exchange Limited and the Official List of the Financial Services Authority with effect from commencement of business on 18th January, 2010.

This new structure makes it much easier to split the life and banking arms.



​
 
From the Annual Report

3. Acquisition of Irish Life & Permanent plc by Irish Life & Permanent Group Holdings plc
Irish Life & Permanent Group Holdings plc was incorporated on 24 August 2009 as Aquilani plc, its name was
subsequently changed to Irish Life & Permanent Group Holdings plc on 9 October 2009. The company was
established as a group holding company. At 31 December 2009, the company had no subsidiaries.
On 15 January 2010, Irish Life & Permanent plc (“IL&P”) was acquired by Irish Life & Permanent Group Holdings plc.
On this date under a scheme of arrangement sanctioned by the High Court, 276,782,344* Irish Life & Permanent plc
ordinary shares were cancelled and Irish Life & Permanent Group Holdings plc subsequently issued the 276,782,344
ordinary shares to the shareholders of Irish Life & Permanent plc on a one-for-one basis. On the same day, Irish Life
& Permanent plc issued 276,782,344 ordinary shares to Irish Life & Permanent Group Holdings plc. Irish Life &
Permanent plc is now a 100% subsidiary of Irish Life & Permanent Group Holdings plc.
The introduction of Irish Life & Permanent Group Holdings plc as a new holding company with exactly the same
shareholders as the previous parent is a common control transaction and has been accounted for similar to a
reverse acquisition where the existing group is determined to be the accounting acquirer. Consequently, even
though Irish Life & Permanent Group Holdings plc was only incorporated on 24 August 2009 and was not a group
company as at 31 December 2009, the comparative numbers disclosed in these consolidated financial statements
for the period to 31 December 2009 are those of the accounting acquirer, Irish Life & Permanent plc group. The
comparative numbers for the company primary statements are from the period of incorporation 24 August 2009 to
31 December 2009.
In adopting this accounting approach, which is in accordance with IFRS as adopted by the EU, the company has
applied the exemption in Section 149(5) of the Companies Act 1963 only for the purpose of presenting
pre-acquisition earnings of the legal subsidiary as revenue profits and losses in the consolidated financial
statements.
On 18 January 2010, Irish Life & Permanent plc was delisted from the London and Irish stock exchanges. On the
same date, Irish Life & Permanent Group Holdings plc was listed on those stock exchanges.
Irish Life & Permanent plc had a number of share option and share award schemes in which employees of the
company participated prior to the acquisition of that company by Irish Life & Permanent Group Holdings plc. These
included:
- Vested share options 6,355,335
- Unvested share options 577,670
- Vested share awards -
- Unvested share awards 971,967
On 18 January 2010 Irish Life & Permanent Group Holding plc replaced all existing vested share options and all
share awards with the same number of share options and share awards on equivalent terms. 577,670 unvested share
options were also replaced on equivalent terms with the exception that performance conditions attached to these
options fell away pursuant to a “change in control” clause in their terms. This has been accounted for in line with
IFRS 2, Share-based Payments as a modification. The vesting conditions is respect of share options issued in 2008
were dissolved and as such the costs accruing in 2010 have been accelerated. The total cost for 2010 amounted to
20.3m.

* To meet statutory requirements, seven shares were left in issue following this cancellation. These shares are now
held directly by or in trust for Irish Life & Permanent Group Holdings plc.
 
OK

I have checked this out in more detail.

Before the reorganisation The bank owned the life company.

After the reorganisation - the Plc owned the bank which owned the life company.

If things turned out differently, e.g. if ptsb were to merge with the ebs, the PLC could have bought the life company from the bank.

But as of now, the life company is an asset of the bank and this restructuring has made no difference at all.
 
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