A London judge called off a lawsuit between Royal Bank of Scotland Group and a group of investors over a 2008 rights offering without a full settlement agreement, leaving open a slim chance for the small group of holdouts to return to fight the case.
After weeks of fitful negotiations, investors representing 87 per cent of the claim's value have signed the £200 million settlement agreement or will do so, the group's lawyer Jonathan Nash said during Wednesday's hearing. Of the remainder, only one investor with a small number of shares has expressed "dissatisfaction" with the bank's 82 pence per share offer, and none have indicated they intend to refuse, Nash said.
The last week has been filled with speculation about holdout investors’ attempts to raise enough money to fight on, while larger shareholders and groups funding the lawsuit were happy with the bank’s offer. The new agreement leaves the door ajar for investors unwilling to settle to pursue the claim, though they would have to raise money to do so.
Wednesday’s application “is an unusual one,” said Judge Robert Hildyard. However, it “strikes a balance between the interests of the parties and the interests of other court users.”
Judge Hildyard's decision all but erases the chance of a much-anticipated court showdown between investors and former chief executive officer Fred Goodwin, who was running the lender when it was forced into the bailout.
RBS and spokespeople for the shareholder action group declined to immediately comment on Wednesday’s hearing.
The claimants argued that RBS deliberately concealed its financial weaknesses over its £12 billion emergency rights offering. The lender disputed that it had covered up any of its actions, saying the rights-issue prospectus included all the information investors needed, and the claimants were overlooking how volatile markets were in 2008.
The shares have risen 14 per cent so far this year, compared to a 5.5 per cent increase in the value of the FTSE 100 Index of the country’s biggest companies.
- Bloomberg
