StateWest merger vote nears

THE merger between StateWest Credit Society and Home Building Society is progressing, with a disclosure statement and postal voting ballot seeking approval for the second demutualisation of StateWest having been posted to its members last week. StateWest members have been asked to vote by 10am on April 18, 2006. The members will then be asked to vote on the merger proposal in June 2006 once the demutualisation vote is completed and approval threshold has been reached. StateWest chief executive Greg Wall said the company had already received a positive response to the voting. “Yesterday we had 28 per cent of our membership base having voted,” he said. “Twenty-five per cent of members must vote, so we are already above the threshold.” Mr Wall said, of those members voting, 75 per cent must vote in favour of demutualisation in order for the proposal to go ahead. “We want as many people as we can to vote,” he said. “The more people we can get participating in this, the clearer indication the board gets of whether our members want this, or don’t.” Previously, StateWest members voted overwhelmingly in favour of demutualisation, with a yes vote of 90 per cent from 52 per cent of StateWest members. However, former StateWest chairman Pat Kirwan told WA Business News there were more than 27,000 members who failed to cast their vote in the original ballot. A group led by Mr Kirwan has opposed StateWest’s members paying for the second demutualisation ballot. He said the credit society should recover the costs as well as from its legal advisers, Phillips Fox. Mr Wall said the demutualisation ballot would cost $500,000, with the merger costs incurred up to the end of December, disclosed at its January annual meeting, costing $2.6 million. Last December, a small group of opponents to the merger, led by Mr Kirwan, launched a public and legal challenge to the merger after receiving financial backing from United Credit Union. The Federal Court decided that StateWest had failed to keep its investors properly informed, in particular with regard to the requirement of an original disclosure statement to provide information concerning the financial benefits of Mr Wall. At the time, Home chairman Tony Howarth, who plans to chair the merged business, said members would have been told about the salary package before the deal was finalised. The court disagreed. StateWest recently posted an after-tax profit of $473,000 and revenues of $18.8 million for the half-year ending December 31 2005. The figures, which include $2.6 million in merger costs, were included in its disclosure statement for the company’s demutualisation – as part of the proposed merger. In February this year, Home Building Society posted a 43 per cent increase in interim profit to $5.035 million, which managing director Craig Coleman said indicated Home was in good shape going into the proposed merger with StateWest. “We believe the merger of the two organisations will create a dynamic new force in retail financial services in WA and a platform for maintaining growth momentum,” he said at the time. Mr Coleman expected Home to achieve a similar level of earnings in the second half, resulting in an upgrade of the company’s full year net profit (after tax) target to $10 million, representing a full year increase in earnings of 60 per cent. The society said loan balances grew to $1.24 billion in the half, representing an annualised growth rate of 23 per cent, with total deposit balances growing to $1.1 billion, representing an annualised growth rate of 27 per cent. Since the deal was announced, Home’s share price has gone from $8 to more than $12.


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