London clearing house LCH.Clearnet appears to have finally resolved the wrangling over its future ownership after proposing the redemption of over 40% of its shares at a price of EUR10 a piece - an offer accepted by its biggest shareholder, Euroclear Bank.
The clearer has outlined plans for a EUR444 million package which includes a dividend of EUR1.50 per share payable to stockholders on the register on 13 October. In addition, subject to shareholder approval it is proposing a voluntary redemption of up to 33,300,000 shares at EUR10 a piece.
Euroclear says it plans to offload its entire shareholding of 11,712,001, around 15.8%.
LCH.Clearnet says this means it will be owned predominantly by users and exchanges it has a clearing relationship with. This will enable it to work more closely with it customers and "counter competitive pressures by reducing fees".
Chris Tupker, chairman, LCH.Clearnet, says: "It is essential we are positioned to respond swiftly to the changing market environment by offering both lower fees and innovative services. The voluntary redemption is intended to give shareholders who will not benefit from reduced fees the opportunity to sell some or all of their shareholding in the company."
By giving its users a greater stake in the company, LCH.Clearnet hopes to end the long running saga over its ownership, which has seen two takeover bids tabled over the last year.
An offer from US-based Depository Trust and Clearing Corporation last year fell through before a consortium of 11 banks and interdealer broker Icap launched a EUR11 a share bid in May, valuing the outfit at around EUR830 million.
The clearer rejected the offer but has been looking to placate the consortium, which currently holds around 15% of its voting rights, and indicated its willingness to interweave elements of the bid with its own restructuring plans
The agreement with Euroclear will also see the two firms work together on improved post-trade processing. The partnership is intended to provide greater client cost savings and operational efficiencies between the cash securities clearing business of LCH.Clearnet and the custody and settlement capabilities of Euroclear.
Meanwhile, the clearing house has reported its full year results, posting a 16.6% increase in revenue to EUR1.589 billion. Operating profit rose 14.1% to EUR293.6 million with net profit also up, to EUR219.8 million.
Roger Liddell, CEO, LCH.Clearnet, says: "2008 was a year of challenges and successes. We generated record profits and cleared record volumes of over two billion contracts, an increase of 16% on 2007 and over two and a half times those cleared in 2005. At the same time, we faced extremely volatile market conditions and successfully resolved the largest default in banking history."