RULE CHANGE: THE IAWS Co-op plans a rule change that would allow it to cut its stake in IAWS plc to less than 30 per cent. An extraordinary general meeting of the co-op will be held next Monday to approve the change.
Currently, the co-op has a 40.4 per cent stake in the plc but it has written to its shareholders - individual co-operatives - recommending the change to give the board more flexibility in determining how and when best to return value to the co-op and its shareholders.
The rule change will lead to speculation that a gradual movement to below a 30 per cent shareholding is likely in the medium term. A 10 per cent stake in the plc is worth about €100 million. Sources close to the company emphasised that there was no question of the co-op taking any action to the detriment of plc shareholders and that there was no question of any co-op-owned shares overhanging the market.
Changing the rules also gives IAWS plc greater flexibility when it comes to funding its acquisitions. These, as well as its capital expenditure, have been funded fully by debt but the rule change would mean the plc could raise sizeable amounts of equity finance should it wish. In 1996, the co-op distributed 12 million plc shares to its members. Most of these have been retained by the individual co-ops.
Another proposal will result in a share windfall for the plc's 2,500 staff, as the co-op also wants permission to distribute 1.98 million shares - 4 per cent of its plc holding - to the staff. These 1.98 million shares are worth around €18 million.
