Shareholders in the two main entities in the FBD group, the founding co-op Farmer Business Developments and the insurance company, FBD Holdings, have voted in favour of the transaction at two EGMs in Dublin this Thursday.

First, 89% of FBD Holdings shareholders agreed to sell their hotels and leisure business for €48.5m late in the morning.

This will see FBD Holdings exit this business completely by divesting its 50% share in the joint venture with FBD Developments.

FBD Developments then held its own EGM in the early afternoon and 97% voted in favour of buying the FBD Holdings share of the business for €48.5m.

Both meetings saw a packed attendance of shareholders in the Irish Farm Centre. A large number of proxy votes was also recorded.

The proceeds of the sale will be used to bolster the insurer’s reserves "immediately", FBD Holdings Chief Executive Fiona Muldoon told the Irish Farmers Journal. "This is a cornerstone of our plan." Muldoon told the EGM that she expected the company to return to profitability in the last quarter of 2016.

"I would recognise there is a lot of issues we will have to work through," added Muldoon, who was recently appointed to turn the insurer around after it posted losses of €96m for the past year. "We will emerge leaner and stronger," she added in echo to her column in the Irish Farmers Journal last month.

She cited questions from shareholders of FBD Holdings on the company's overhead and claim costs, as well as the price of insurance policies. "These are customer as well as shareholder issues, because they affect our profitability," she said.

Potential dilution

Participants at the EGMs raised additional issues. Several shareholders were concerned at the potential dilution of their holding if the Canadian-based investment firm Fairfax exercises its option to convert its investment into FBD Holdings shares after committing to inject €70m into the company last month. The conversion of Fairfax's investment into equity would reduce FBD Developments's share in FBD Holdings from 25% to around 20%.

"A lot of shareholders would be interested in bailing out the company themselves instead of diluting our shareholding," said shareholder Pat Kearns.

This could pose a challenge to the ratification of the Fairfax investment, after it emerged on Thursday that the deal would have to be put to another EGM of FBD Holdings in the coming weeks.

Another shareholder remarked that the FBD Holdings EGM had only one item on the agenda - the sale of FBD hotels - and felt the decision was made in advance.

Most shareholders interviewed by the Irish Farmers Journal, however, supported the transaction. Kearns noted that the value of properties and hotels was on the rise in Ireland, making the portfolio an interesting asset to buy for FBD Developments.

"It makes sense," added IFA deputy president Tim O'Leary. "The chairman explained they had assets that were not recognised by the Central Bank, and they had to convert them into something more liquid. This is what they are doing."

When approached after the EGMs, company chairman Michael Berkery said he would not comment to the Irish Farmers Journal.

Shares in FBD Holdings were up 2% at €7 Thursday afternoon.

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FBD shareholders to vote on hotels

Listen back to our podcast ahead of the FBD EGMs below: