April 29, 2019 / 10:50 AM / 3 months ago

NSF gives Provident investors more time to accept hostile bid

(Reuters) - Sub-prime lender Non-Standard Finance (NSF) expressed “strong confidence” in its bid to buy rival Provident Financial on Monday, giving Provident’s investors more time to accept its 1.3 billion pound ($1.68 billion) offer.

NSF’s hostile bid for Provident has turned into a bitter war of words between the two subprime lenders with NSF accusing Provident Financial executives of mismanaging the company.

Provident has raised concerns about the strategic, operational and financial logic of NSF’s offer and its historical dividend payments and share buybacks, prompting NSF to identify errors related to its past payouts.

NSF has been trying to buy its larger rival as Provident battles to recover from a string of setbacks, including a botched restructuring of its home credit business, profit warnings and a dividend suspension.

NSF, whose bid is led by CEO John van Kuffeler, a former Provident boss, has the backing of the holders of just over 51 percent of Provident’s shares - well short of its 90 percent target.

Provident, established in 1880 and based in the northern English city of Bradford, has repeatedly said NSF’s offer is not in the interests of its shareholders.

NSF on Monday extended the closing date for its offer by one week to May 15 and said it would not extend the deadline again.

“As we approach the final stages of this process, now feels like the right moment to remind those of you who have not already accepted our offer why I and the NSF Board believe strongly that you should do so,” van Kuffeler said in a statement.

PANIC

NSF reiterated its plan for “a brighter future for Provident”, including simplifying the lender by selling one unit and closing another.

“NSF has panicked ... (it) has failed to address any of the substantive points Provident raised about their plans for Vanquis, Moneybarn, Loans at Home or Satsuma,” a Provident Financial spokesman said, referring to some of the group’s businesses.

“Their offer – a 24 percent discount to current the Provident share price – remains risky, flawed and value-destructive.”

Both companies provide short-term loans to consumers who might otherwise struggle to borrow from mainstream banks. The sector is under pressure as lawmakers want to rein in punitive interest rates charged on borrowing by often vulnerable people.

Reporting by Noor Zainab Hussain and additional reporting by Sangameswaram S in Bengaluru; editing by Jason Neely, Louise Heavens and Kirsten Donovan

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