AWB sells loan book to ANZ
AWB Limited (AWB) announced the sale of Landmark Financial Services’ $2.4 billion loan book and $300 million debenture book to ANZ Banking Group Limited (ANZ). The company said the completion of this transaction contributes significantly to achieving its corporate objectives of a streamlined debt profile and simpler lower risk business.
Upon completion of the sale, AWB said about $2.1 billion of debt associated with the loan book to be repaid plus approximately $155 million of capital would be released.
Additionally, the company said there is the potential to release a further $13 million, depending on the performance of specific loans over time.
AWB said current earnings associated with the loan and debenture books would be replaced in part by earnings under the relationship with ANZ including referral and trail fees and earnings from the release of capital.
The company said the sale of the loan and debenture books is subject to receiving relevant regulatory approvals from the Australian Competition and Consumer Commission and Australian Prudential Regulation Authority. The sale is expected to close early 2010.
AWB said Landmark has also entered into an exclusive relationship with ANZ for Landmark to refer any customers who may be interested in acquiring financial services products to ANZ, with the initial term of the relationship being three years.
As part of this relationship, AWB said the vast majority of Landmark Financial Services employees would be offered employment with ANZ.
The company added that Landmark would earn a fee on all loan referrals of Landmark customers as well as a trail fee on existing loans and all future loans referred via the relationship.
Landmark managing director, Graeme Jacobs, said the arrangement is similar to the successful alliances the company has with insurance providers.
”The transaction does not affect Landmark’s successful insurance business,” Mr Jacobs said.
“I am proud of the success we have had in our Financial Services business however believe that our customers will be better served by Landmark aligning itself with a financial institution which has the ability to provide a broader suite of products at competitive rates.”
AWB said there would be an estimated annualised pre-tax earnings reduction of $5 million to $10 million on a full year pro-forma basis as a result of the transaction and referral relationship.
The company said it would book a $62 million pre-tax significant item for restructuring costs and write-off on the lending book in the financial year ending 30 September 2010.
As at 1029 AEDT, AWB shares were up 4.5c to $1.225, while ANZ shares were unchanged at $21.95.
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