Frequently Asked Questions about the Ezifin proposed demutualisation and acquisition of shares in MCU Ltd

What approvals are required to complete this sale?

The sale requires:

  • a vote by members to demutualise the credit union so that new shareholders can invest in the business, which will be done by postal ballot;
  • a Scheme of Arrangement in accordance with ASIC requirements, which will be sanctioned by the Supreme Court;
  • a further vote by members to approve the Scheme of Arrangement;
  • approval from the Federal Treasurer and APRA for the demutualisation and restructuring of the shareholding; and
  • a further sanction from the Supreme Court.
The previously proposed sale was rejected by the Federal Treasurer, why would this be more likely to succeed?

The Board had carefully considered the reasons why the Federal Treasurer and APRA would not support the previous transaction and have looked to address those issues in this replacement transaction. Ezifin have indicated an understanding of the regulatory issues and have structured their offer to address these concerns as far as possible. There is still a possibility that APRA will not support the proposed transaction, and we are working through the regulatory issues with it.

Why does the board keep trying to sell the credit union?

Due to their small size, and increasingly constraining regulations limiting capacity to grow financial institutions such as MCU Ltd are unlikely to be viable in the longer-term. The MCU Board recognises the importance of keeping the spirit of the credit union within Maleny and continues to seek an acquirer that has the capital to invest for the future and is acceptable to regulatory authorities.

What is being offered by Ezifin to members of the credit union?

Members will receive $750 in cash and $750 in shares in the entity that will own the business moving forward.

Member Investment Shareholders will receive the face value of their investment, that is, they will be repaid their capital investment in full.

In addition, the MCU Charitable Trust will receive $1m and earn a percentage of future profits.

Can I sell my shares?

The shares will not be listed on the ASX or any other public exchange. However, there will be no restriction on you selling your shares privately to other shareholders or non-shareholders.

What happens to my shares if I close my accounts?

The shares are your property to retain or sell to another buyer, as you choose. You do not have to maintain a bank account with the new entity if you choose not to do so.

What type of financial institution would MCU become?

MCU Ltd will retain its banking business as an authorised deposit-taking institution. However, it will be able to offer a wider range of products, provide larger loans than it is currently able to provide, and improve its on-line banking services.

Are depositors still protected by the Federal Government guarantee?

Yes. The Financial Claims Scheme that provides a government guarantee on deposits with Australian incorporated banks, building societies and credit unions, will remain in place.

Will the credit union still be owned by members?

To sell MCU and realise value for its members, it will be necessary to demutualise so that members will become customers. Customers can maintain some ownership by retaining the offered $750 of shares in the new entity.

How long will this process take?

The legal process and approvals required by members and regulators takes some time, but we aim to conclude the process by the end of September.

Can the sale process still proceed given the Covid-19 restrictions on meetings?

The Australian Securities and Investment Commission now permit virtual or hybrid meetings and have issued guidelines on how these are to be conducted. If necessary, it is likely that we will make use of such arrangements.

How does Ezifin fit with MCU values?

This will be addressed in greater detail by Ezifin but there is a long-term commitment to the community by keeping a banking presence and support of the charitable trust. Ezifin has agreed to retain all current staff and to keep the branch open for at least 10 years.

Why is the board supporting this deal?

The Board believes that this deal represents the best outcome for members. Ezifin will re-capitalise MCU so that lending can be expanded, systems updated and branch presence secured.

Specifically though, Ezifin’s technology can be used to provide a broader range of products that provides an alternative to the major banks.