Provident Financial hits out at NSF again over unanswered questions

Provident Financial hit out at Non-Standard Finance again on Wednesday, accusing the smaller rival of failing to respond to key questions about its £1.3bn hostile offer for the FTSE 250 doorstep lender.

It said NSF's announcement earlier this week does nothing to allay the board of Provident's "significant" concerns around the strategic, operational and financial merits of the offer.

"The Provident board notes the announcement from NSF on 29 April, which it believes falls far short of providing satisfactory responses to shareholders and yet again demonstrates a disregard for Provident shareholder value."

Provident said it continues to believe that NSF's offer undervalues the group and that the company's plans for the business could result in material value destruction for shareholders.

Provident also said that NSF's revised timetable for the bid leaves shareholders exposed to a potential "blind and uncosted" remedy from the Competition and Markets Authority.

NSF said on Monday that it had extended the deadline for its takeover offer by a week to 15 May, and urged Provident shareholders to accept the offer, which it expects to become or be declared wholly unconditional by 5 June.

Under the terms of the transaction, Provident shareholders would receive 8.88 new NSF shares, valuing each of their shares at 403p.

Provident also said in its statement that it continues to question the suitability and competence of the NSF management team, which has overseen "unlawful" dividend payments and share buybacks since its IPO.

The company was referring to the fact that NSF has admitted to the payment of unlawful dividends between October 2016 and October 2018 aggregating around £12.5m and unlawful and consequently void share buybacks of a total of around 5m shares aggregating £3.5m between November 2017 and March 2019.

Provident said: "The fact remains that since the NSF IPO, NSF has not generated post tax profits. The dividends and share buybacks have therefore effectively been returning to shareholders monies raised from them.

"This can be evidenced by the fact that the unlawful dividends increased the NSF group's retained losses in each year they were paid. There is no explanation provided in the explanatory notes to the NSF AGM notice as to how profits have been created to make good the deficits in profits available for distribution."