Gibraltar financier makes offer for London Scottish Bank

| June 22, 2008 | 0 Comments

Struggling sub-prime lender London Scottish Bank (LSB) has received an informal approach from Gibraltar-based financier, Gregory King.

Mr King’s plans are to purchase a majority stake in the crisis-torn bank. Last month, he approached Robin Ashton, LSB’s chief executive, with a proposal to underwrite a rescue rights issue in exchange for control of the business.

However, the proposal was dismissed by Mr Ashton, which was priced at around 8p a share, a premium to last Friday’s closing price of 7.6p.

LSB has been searching the City in a bid to raise at least £45 million via an equity fundraising to improve the bank’s balance sheet. Numis began marketing a potential fundraising for the group last week.

Should LSB be unsuccessful in raising at least £32.5 million by the end of October, it will be forced to put the business up for sale, or to auction off its profitable debt-collection subsidiary, Robinson Way.

A plan is already underway by Ashton who is cutting back parts of the group’s operations to concentrate on Robinson Way, which saw its profits soar 57% last year to £13.9 million.

Following a review by Rothschild, Ashton is planning to shut the group’s London Scottish Finance operation, which will put nearly 350 jobs at risk.

LSB lends to lower-income families and operates as a debt collector. Last year, it fell £15.7 million into the red.

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