Lombard shareholders approve plan for reverse takeover

Perth-based Australian Consolidated Insurance, which manages just under $100 million of insurance premiums across Australia and New Zealand, is proposing the creation of a new NZX-listed entity, Lombard Insurance Group.

Under the proposal, Lombard will make a takeover offer to ACIL shareholders for all ACIL's 42.8 million shares. It will then offer 1.48 million new shares in Lombard as consideration for the ACIL shares, or 34.6 Lombard shares for each ACIL share. Lombard would then buy back the shares at 1.2 cents apiece. Lombard shareholders can accept all or part of the buy-back offer, which closes on April 10.

Lombard Finance, the major part of the Lombard Group, went into receivership almost two years ago owing 4,400 investors $127 million. Its so-called assets were 27 loans related to bare subdivisions and uncompleted residential developments, with 18 of the loans second or third mortgages or worse. Debenture holders received their first payment of 6.5 cents from receivers PriceWaterhouseCoopers in December 2009, and have been told they can expect to claw back between 17% and 29% of their original investment.

If the deal is accepted for the Lombard Group, which is effectively a shell company with zero value, ACIL chairman and chief executive Wayne Miller will become CEO of the newly formed Lombard Insurance Group.