the reason westpac isnt interested in the loan book is because...

the reason westpac isnt interested in the loan book is because it will be getting its new franshises to cherry pick those clients away from rhg and switch them to a westpac backed loan. this means the loan book is worthless , no wonder no one wants it.
the only way shareholders will get any value is to vote no and auction off the company as a whole.


Westpac confident on RAMS rescue
Jesse Hogan
October 11, 2007

WESTPAC chief executive David Morgan is confident RAMS shareholders will endorse the bank's $140 million rescue package, despite the smaller lender's value plummeting 58 per cent since the deal was announced.

The proposed deal, announced last week, will involve Westpac buying the RAMS brand, its 92 franchise outlets and underwriting all future loans made by RAMS franchisees. But it will also — if approved by shareholders — result in the parent RAMS Home Loans business not issuing any more loans and having to rely on its existing mortgage book for income, once the book is refinanced.

After a speech to the Australia-Israel Chamber of Commerce, Dr Morgan reiterated its agreement to buy RAMS' franchise distribution business was "a very fair and compelling offer".

"We've been able to guarantee the franchisees' future by giving them access to ongoing funding, we paid a fair price for the distribution system and we've always moved quickly to help RAMS with the financing of its back book, so the combination of those three things … make it a very fair and compelling offer," he said.

RAMS shares peaked at $2.50 in July before it was affected by the US subprime loans crisis, which raised the cost of borrowing for companies. The shares had sunk to 85¢ by the time the Westpac alliance was announced and last traded at 36¢, helped by a 1¢ rise yesterday.

Dr Morgan said the "liquidity crisis" still had "some way to run" in Australia. He did not expect the deal to be blocked by either a rival bid or by disgruntled RAMS shareholders.

"I think (RAMS founder) John Kinghorn was very open and honest when he put to shareholders the Westpac proposition, and he was very open and honest in saying the alternative was that the doors would close."

Dr Morgan denied that, if the deal was completed, RAMS franchisees would be expected to persuade customers with loans financed by RAMS Home Loans to refinance them through Westpac.

"We don't own the thing yet, but we're confident, with those franchisees, that they will try and do the right thing by their customer, and if the right thing for the customer is to stay where they are, that's what they'll do. And if it's the right thing for the customer to switch, then they'll switch."

Westpac has committed to contribute to a refinancing of RAMS' mortgage book if the company can secure other investment, although Dr Morgan said that would not be considered until early next year.