Aspis raises odds to win UL stake, Bank of Cyprus letter is key

Finance Minister Michalis Sarris has a few more days to go before he takes a final decision on whether the Superintendent of Insurance was justified to block the transfer of Universal Life Insurance Co. shares from Marfin Popular Bank to Aspis Holdings.

In February, Aspis Holdings (formerly MFS Holdings) announced the acquisition of a 35.12% stake in Universal Life Insurance Co. from Marfin Popular Bank at CYP 3.00 (EUR 5.12) per share for a total of 4.64 mln shares in a cash deal valued at CYP 35.9 mln (EUR 61.4 mln).

The deal however, is subject to the approval of the Superintendent of Insurance, Victoria Natar, who subsequently blocked the transfer. As it was immediately appealed by Aspis, the case was forwarded to the Minister of Finance for a final decision within 45 days from the date of appeal.

Aspis Holdings CEO Lambros Christophi told the Financial Mirror that he is confident that Aspis will win the appeal. In the meantime, Christophi has sued the Superintendent for CYP 1 mln in damages citing several clauses mentioned in a letter he received from her that were probably included in the arguments brought by the Superintended against Aspis.

“If she (Natar) has a personal problem with me, then so be it, but it should not have been allowed to hurt the interests of thousands of shareholders of Aspis who stand to lose millions if the deal is not allowed to proceed,” said Christophi.

Previously, Marfin Popular Bank CEO Andreas Vgenopoulos had said that irrespective of whether or not Aspis wins regulatory approval, MPB has received the cash and has a clause in the agreement that allows it to keep the cash and the shares if it fails to win regulatory approval. “So the ball is with Aspis,” Vgenopoulos had said.

In the meantime, Aspis Holdings submitted a public offer for Universal Life at CYP 3 per share and if the share transfers are allowed to proceed, then it will control 40% of UL’s capital.

About 48% of the capital of UL is controlled by Andreas Georghiou and the Photiades family who have allied against Aspis. The remaining 12% is mostly held by institutional investors.

 

— BOC liquidation request

 

Christophi insists that the justifications brought by the Superintendent blocking the transfer of the UL shares are not valid.

“Four of the seven main reasons cited by Natar are personal attacks against me, for which I will not comment and will leave the courts to decide,” he said, adding that the other points cited by Natar against the deal have many inaccuracies.

Christophi said the Superintendent of Insurance has claimed that one of the reasons why she ruled against the transfer of shares is that, “Aspis may be liquidated at any time because of a court decision secured by Bank of Cyprus for outstanding debt amounting to CYP 3.6 mln.”

Christophi says this is not true and says he has a confirmation from the bank stating that, “Bank of Cyprus has not filed a petition requesting the liquidation of Aspis Holdings, formerly MFS Holdings Pcl.”

Informed sources from the office of the Superintendent have argued that Aspis owed BOC the amount of CYP 3.6 mln, which they acknowledge has been settled since, but nevertheless they insist that Bank of Cyprus had secured a liquidation order.

A legal expert told the Financial Mirror that if in fact Aspis is in possession of a letter from Bank of Cyprus stating that it never asked for its liquidation, then that may be a good reason for Sarris to lean towards the Aspis camp.

 

— Previous permission

 

Christophi said another argument brought by Natar against the deal is that Aspis abused the permission given to Aspis Group President Pavlos Psomiades to acquire shares in MFS, which were subsequently transferred to Aspis AE and Commercial Value SA of Greece without her permission.

“Natar was informed in September 2006 of the intention to transfer, but she did not respond within the 60 days time as the law states, which is why this argument is also not valid,” said Christophi.

The office of the Superintendent of Insurance maintains that it has never received such an application. It furthermore adds that it wants to block Aspis to take control of Universal Life, one of the largest life insurance companies of Cyprus.

But Aspis counter-claims that it has the required capital, know-how and expertise as well as permission from other regulatory bodies such as the Central Bank to engage in their business. It further claims that since it does not wish to take over the management of UL, the transfer of the shares should be allowed to proceed.

The Superintendent argues that if the share transfer is allowed to proceed, at a later stage and assuming that any one of the large shareholders tilts in favour of Aspis, then Aspis may secure management control of UL.

It’s now up to Michalis Sarris to decide if the deal will be allowed to proceed or blocked.