Sub-prime lender Provident has urged shareholders to take no action in relation to a £1.3bn hostile takeover bid from Non-Standard Finance (NSF), as the chairman accused its rival of “unlawful” dividend distributions.
NSF confirmed last week that some dividend payments since 2015 were “technical infringements” of the Companies Act, however, in a letter to investors Provident chairman Patrick Snowball claimed the transactions were unlawful.
Snowball said: “They were described by NSF as “technical infringements” but the simple fact and truth of the matter is that they were unlawful.
“These unlawful distributions are a telling indictment of the competency of the NSF team and the weak oversight of their board and must call into question their ability to run a business some seven times larger than their own and one which includes a regulated bank.”
Snowball, who was appointed as chairman six months ago, also said that NSF has a “track record of value destructive acquisitions” and warned that the “coup” could cost shareholders as much as £40m in transaction fees.
He said: “Shareholder, this is a poorly thought out transaction. We see no benefit to those invested in Provident who do not have a similar holding in NSF.
On Friday NSF issued a statement that admitted to illegally paying past dividends but insisted that the issues would not affect the firm’s financial position or its bid for Provident.
“The company has identified certain technical infringements regarding historic distributions made by the company. All of the infringements can be rectified and the NSF board considers that none of the issues impacts the company's financial position or prospects or shareholder value,” NSF said.