Nrma Wails The Mail House Blues
Sydney Morning Herald
Thursday May 24, 2001
Thousands of NRMA Insurance shareholders have been promised compensation by the company after they were accidentally denied a chance to participate in the company's highly publicised $404 million share buyback.
NRMA has blamed a mistake by a mailing subcontractor at its share registry since last August's listing, ASX Perpetual Registrars, for the gaffe.
The embarrassing error follows a litany of complaints last year about the state of the insurer's member database after many then NRMA members said they were denied participation in the demutualisation and share issue.
The buyback of 10 per cent of NRMA shares closed last week after demand from more than a quarter of a million of NRMA's 1.6 million shareholders saw a largescaling back of acceptances.
NRMA yesterday confirmed many shareholders who had rung a hotline to order the re-mailing of a buyback booklet did not receive the documents, which were meant to be mailed within 48 hours of the request. An NRMA spokeswoman would not say how many shareholders were affected, but they are believed to number several thousand.
In letters to the affected shareholders, interim chief executive Mr Ian Brown, said NRMA would remedy the situation and was ``currently exploring a number of compensatory mechanisms". NRMA is likely to detail the compensation later this week.
The compensation would ensure that if those shareholders intended to participate in the buyback, they would be able to sell their shares and be in the same financial position, including the tax benefits. An NRMA spokeswoman said: ``What we intend is the affected shareholders will not be any worse off than if they participated in the buyback."
ASX-Perpetual's acting chief executive Mr Paul Attwood said: ``There was a procedure in place that was working for a period and then it stopped working unfortunately."
NRMA formally cancelled the 10 per cent of shares it bought under the buyback and under law cannot cancel more without shareholder approval this year.
The buyback was highly attractive because $1.78 of the final $2.72 price was in the form of a capital return and the balance as a fully franked dividend.
The mistake comes at an inopportune time for NRMA, which is recovering from the collateral damage of last month's boardroom antics, which saw both the company's chairman and chief executive resign. NRMA is also facing a potential $20 million hit to its 2002 profits because of plans by the State Government to tax the general insurance industry which NRMA dominates in NSW to cover HIH's losses.
NRMA's shares closed 3c higher at $2.90 yesterday but briefly jumped over $3 on Monday for the first time since August on favourable international index changes.
The latest hiccup comes as NRMA has been progressively issuing more shares to former members as its review panel settles disputes about allocations in last August's float.
Even though many members still argue they should have been issued shares, the review panel is scheduled to end in August.
© 2001 Sydney Morning Herald