Citi Business News has gathered HFC bank may hit the courts to challenge moves by Republic bank to take over the bank.
Persons familiar with the matter tell Citi Business News HFC may be heading to court in a couple of weeks to challenge the Securities and Exchange Commission (SEC)’s code on takeovers and mergers.
HFC believes there was a breach of procedure in the execution of the Securities and Exchange Commission’s code on takeovers and mergers and will be challenging the sale of some of the shares that were sold to Republic bank.
The code among others requires a shareholder in a listed company whose shareholding reaches over 30 percent to make an offer to remaining shareholders.
Republic bank in line with this last month announced it will make an offer to all shareholders of HFC bank to increase its investment in the bank.
Republic Bank Limited an independent Caribbean bank with a history that spans 176 years of service has been increasing its shares in HFC bank since 2012 when it made its first purchase.
It purchased 8.79% shares in HFC Bank Ghana for an amount of $8 million in December, 2012.
The bank bought the stake when HFC floated 112,420,246 ordinary shares under a private placement.
Republic’s stake further increased to 32.02 percent after buying 23.23 percent additional shares which was previously held by Aureos Africa Fund LLC.
On Friday 7th June 2013 Republic bank acquired 68,854,703 ordinary shares of no par value in HFC Bank Ghana Limited from Aureos Africa Fund LLC at a price of GHS0.56 per share.
It further acquired 7.98 percent additional shares in 2013 from Union Bank of Nigeria which increased its shareholding in the bank to the current 40 percent.
With the latest development however it appears HFC bank will be challenging either the Aureos Africa Fund LLC sale or the Union Bank of Nigeria sale.
The takeover by HFC by Republic bank has been fiercely resisted by some shareholders of the bank including the MD of the bank Asare Akuffo who owns 0.30 percent shares in the company.
He earlier told Citi Business News SEC’s decision to refuse a request for a waiver by the republic bank to take over HFC was unfortunate.
Republic bank last year applied for a waiver from the Ghana Securities and Exchange Commission (SEC) for an exemption from the requirement to make a mandatory takeover offer for the remaining shares in HFC Bank.
Republic Bank in its application indicated that it had no intention of taking over HFC Bank, because it had not got a deeper understanding of the Ghanaian market.
SEC however rejected the application by Republic Bank to be exempted from taking over HFC Bank.
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