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Australia : BENDIGO Bank to acquire Rural Finance for $1.8b

May 5, 2014

Bendigo and Adelaide Bank said that it has agreed to purchase the business and assets of Victoria s Rural Finance for $1.78 billion as its shares entered a trading halt ahead of a capital raising.

The halt was asked to be in force until the begining of trading on May 6 as the bank get ready to issue new ordinary shares. Macquarie Capital will direct the capital raising and Allens is providing legal advice to the lender.

In a statement, Bendigo and Adelaide Bank said it expected to complete the purchase of the business and assets of Rural Finance by July and that it was committed to maintaining Rural Finance s distinct brand and its presence in 11 locations across Victoria .

Managing director Mike Hirst said in a statement This transaction brings together two iconic Victorian businesses, both with long and proud histories of serving farmers and communities, .

Bendigo is commissioning a fully underwritten $230 million share placement to chosen institutional investors. The raising s price range is $10.82 to $11.05 per security, representing a 3 to 5 per cent discount to the stock s last close. As well as the placement, the bank s shareholders can participate in a non-underwritten share purchase plan.

The purchase was formalized with the Victorian state government earlier and will comprise all the assets, including Rural Finance s loan book, which has an estimated value of about $1.695 billion.

The purchase is dependent on APRA approval.

Victorian treasurer Michael O Brien said that the proceeds would be used to pay for rural infrastructure projects such as the $200 million standardization of a rail line from Geelong to Mildura.

He said the sale would qualify for the federal government s promise to grant 15 per cent of the sale price to the state, yielding an extra $60 million for the state, under the infrastructure deal signed by state premiers on Friday.

Mr O Brien said, It s a very good business and it s been very well valued by Bendigo and Adelaide Bank .

He said the government received independent advice from JP Morgan not go to the market with the sale, hence the government going through a private treaty.

As one condition of the sale, non-executive employees would retain their jobs for at least 3 years. The funds from the sale has been factored into Tuesday s state budget.

The treasurer said that the sale was part of the state s asset recycling program which also includes the long-term lease of the Port of Melbourne.

Mr O Brien said that a KPMG study has recommended a medium-term lease, of around 40 years, instead of the previously mooted 99 years, which had valued the asset at around $6 billion. The port which will go to the market in early 2015.

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Source: TendersInfo (India)

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