LONDON, October 31, 2013 /PRNewswire/ --
Institutional shareholder Equilibria Capital ("Equilibria") has called for RHJ International ("RHJI" or the "Company") to desist from the acquisition of BHF Bank and instead return capital to shareholders, following the withdrawal of BlackRock from the acquisition group.
Equilibria Capital Management, which holds almost 3% of the issued share capital of RHJI, has requested that RHJI withdraw from its planned acquisition of BHF Bank and instead return capital to shareholders. On October 31st, RHJI announced that BlackRock had pulled out of the deal to purchase BHF Bank in conjunction with RHJI, but that the Company intended to proceed with the purchase. Shortly after this announcement, BaFin, the German banking regulator, publicly stated that RHJI would have to present a modified or new request for approval and that a decision by the regulator in the short term is unlikely.
The withdrawal of BlackRock from the acquisition is a significant blow to the credibility of the transaction, Equilibria believes. Moreover, it effectively removes the strongest and best-capitalized member of the syndicate from the acquisition group, thereby weakening RHJI's position. Equilibria believes that neither RHJI nor its subsidiary, Kleinwort Benson, can complete the transaction without putting significant strain on their respective balance sheets. Analysts and rating agencies have already indicated that the acquisition, which offers virtually no synergies, could result in credit rating downgrades to Kleinwort Benson, BHF Bank, or both.
At the Company's AGM, held in June of 2013, the Board and management team of RHJI made a commitment to shareholders that they would walk away from the acquisition of BHF Bank and return capital to investors if no approval from the regulator was received "by the end of the summer of 2013". It is our belief that the commitment to return capital was critical in helping the current RHJI Board members preserve their positions at the AGM that took place in June. Equilibria Capital believes that it is time for RHJI to honour its promise to shareholders to walk away from the BHF transaction and return capital.
Fabio Lopez Ceron, CEO of Equilibria Capital, commented:
"The proposed acquisition of BHF Bank has been dealt a significant blow with the decision of BlackRock to withdraw from the acquisition syndicate. We believe that RHJI does not have the financial strength to continue with this acquisition which, if completed, would put Kleinwort Benson at risk of credit rating downgrades and place significant strain on the balance sheet of RHJI. It is time for the Company to honour its promise to shareholders."
Daniel Tafur, CIO of Equilibria Capital, added:
"In our humble opinion, the ill-conceived acquisition of BHF Bank, in conjunction with the drawn-out and costly execution process is both a testament to the incompetence of the RHJI management team and provides further evidence of the complete disregard that the managers and board of the Company have for shareholders. It is time for the management of RHJI to recognize that shareholders' interests would be best served by a return of capital, and the execution of a business plan aimed at building long-term value at Kleinwort Benson."
Fabio Lopez Ceron
James Macey White
SOURCE Equilibria Capital Management