Institutions to talk tough on ScotAm ballot

Three UK fund managers with thousands of Scottish Amicable policies in their investment trusts are to meet next week to discuss voting down the company's plans for a two-stage de-mutualisation unless it calls its ballot of members.

The three firms, Scottish Value Management (SVM), BZW and Kleinwort Benson want ScotAm to discuss takeover offers from various bidders, including Abbey National which declared its hand last week, before putting proposals to a vote.

Brian Moretta, fund manager of SVM's Life Offices Opportunities Trust, said yesterday: "Abbey National has not got detailed enough figures to put a proper deal on the table. It needs more information before it can do so.

"If Scottish Amicable puts its proposals forward [before then] it is running a very serious danger of having them rejected. That would put its management in a very difficult position."

Simon White, director at Kleinwort Benson Investment Funds, said his company would look carefully at any ScotAm proposals. His comments came as the increasingly embattled ScotAm board restated its policy of going ahead with existing plans, involving an immediate pounds 75m bonus to policyholders if they vote for demutualisation. Up to pounds 400m might be available at flotation in three to five years.

Abbey National's deal involves about pounds 1.4bn, of which at least pounds 400m would go to shareholders in cash or shares, with the rest being paid for the value of the underlying life fund.

Meanwhile, the likelihood of other bidders entering the race increased as it emerged that at least one company, the Dutch insurer Fortis, has contacted ScotAm to offer talks. Fortis refused to comment. ING, the Dutch owner of Barings, also refused to comment on suggestions that it too has contacted the Scottish company.

Experts also pointed to Prudential and NatWest as preparing to mount an assault.

Abbey National yesterday prepared to step up its takeover battle for ScotAm by threatening to take the campaign to the insurer's 1.1 million policyholders if a ballot goes ahead.

Abbey National's tactics include a massive media publicity blitz, and mailing as many policyholders as possible through the client lists of independent financial advisers. Abbey is also prepared to demand ScotAm provide it with a full list of policyholders so it can mail them details of its offer.

A spokeswoman said: "We are hoping to be able to deal with the management there in a friendly way and we hope it won't be necessary to do this."

Lazard Brothers, Abbey's advisers, yesterday wrote to SBC Warburg, who are advising ScotAm, to table a bid for the company formally .

John Nelson, vice-chairman at Lazards, said in a letter to Jock Birney, his opposite number at SBC Warburg, that Abbey National's offer was "substantially more attractive" than his own proposals.

"Accordingly, we are strongly requesting you to defer sending your proposals to policyholders with the Scottish Amicable board's recommendation."

A ScotAm spokesman said Abbey was asking for privileged access to information before policyholders.

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