Rural Finance sold to Bendigo Bank

Bendigo and Adelaide Bank said it has agreed to purchase the business and assets of Victoria’s Rural Finance for $1.78 billion.

Bendigo and Adelaide Bank said it has agreed to purchase the business and assets of Victoria’s Rural Finance for $1.78 billion.

Bendigo and Adelaide Bank said 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 requested to be in force until the start of trading on May 6 as the bank prepares to issue new ordinary shares. Macquarie Capital will manage 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”.

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

Bendigo is undertaking a fully underwritten $230 million share placement to selected 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 formalised with the Victorian state government earlier on Monday and will include all the assets, including Rural Finance’s loan book, which has an estimated value of about $1.695 billion, the company statement said.

The acquisition is subject to APRA approval.

Victorian treasurer Michael O’Brien said 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.

“It’s a very good business and it’s been very well valued by Bendigo and Adelaide Bank,” Mr O’Brien said on Monday

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 keep their jobs for at least three years. The funds from the sale has been factored into Tuesday’s state budget.

The treasurer said 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 on Monday 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.

--THE AGE 

Smartphone
Tablet - Narrow
Tablet - Wide
Desktop