Provident Financial Group questions NSF's track record
Provident Financial group has called into question the merits of the recent hostile takeover bid launched by rival sub-prime lender NSF, including by questioning the company's track record on dividend payouts and distributions.
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In particular, Provident put in doubt NSF's ability to conclude a sale of its Moneybarn unit and funnel the resulting funds towards a meaningful capital distribution without negatively impacting the combined group's funding ability, debt ratings, balance sheet and profits.
As well, Provident queried the origin of the profits distributed to shareholders by NSF in 2016, and questioned whether its June and October 2018 distributions were covered by distributable profits.
In the case of the latter, Provident also questioned if the dividend was even "permissible" under the Companies Act 2006 given the requirement to the meet the net assets test.
On 22 February, NSF offered £1.3bn for Provident, in effect asking for a discount to take it over.
NSF was run by John van Kuffeler, Provident's former boss, and at the time of its bid the company said it had the backing of more than half the shareholders of its takeover target, including Neil Woodford, Invesco and Marathon.
As of 0823 BST, shares of Provident Financial were standing 1.47% higher at 525.0p.