Link's UK unit faces $57 million fine in Woodford probe; D&D buyout under threat
Australia's Link Administration said on Wednesday Britain's financial regulator may fine a UK unit 50 million pounds ($56.86 million) in addition to potential 306.1 million pounds in redress over its management of a now defunct fund.
Australia's Link Administration said on Wednesday Britain's financial regulator may fine a UK unit 50 million pounds ($56.86 million) in addition to potential 306.1 million pounds in redress over its management of a now defunct fund.
The potential fine and redress payment casts doubts over the share registry firm's nine-month-long buyout talks with Canada's Dye & Durham (D&D), which has already slashed its offer by a fifth from an agreed price to A$1.95 billion.
Link shares fell 1.6% to A$3.39 in early deals, a discount of 11% to the latest buyout offer of A$3.81 apiece and about 30% to the previous agreed-upon proposal of A$4.81 per share.
UK-based Link Fund Solutions Ltd (LFSL), which managed the LF Woodford Equity Income Fund (WEIF), is being investigated by Britain's Financial Conduct Authority (FCA) for the fund's collapse in June 2019.
LFSL was the authorised corporate director for the 3.7-billion-pounds WEIF, which closed in October 2019, and whose assets were picked by veteran star manager Neil Woodford.
Woodford was criticised by lawmakers and investors for holding a large number of illiquid assets, making it hard to meet redemption calls after months of underperformance.
Link Group said on Wednesday it had not made any commitment to fund or financially support LFSL, and considered any liabilities related to the Woodford matters to be confined to the fund manager.
"LFSL will explore all options, including engaging in settlement discussions with the FCA, challenging any warning notice that may be issued at the regulatory decisions committee and further through the upper tribunal," it said.
The increasing roadblocks for Link-D&D buyout underscore the growing problem of execution risks in Australian mergers and acquisitions in a year marked with share market gyrations and hard-line regulatory approach.
Last week, private equity firm KKR & Co said it would not improve its already rejected $14.5 billion offer for Ramsay Health Care after the hospital operator posted a hefty profit decline.
($1 = 0.8794 pounds)
($1 = 1.4948 Australian dollars)
Copyright Thomson Reuters. All rights reserved.