Steelsands Credit Union members reject transfer of engagements under the Friendly Societies and Credit Unions Act to Credit Union Baywide

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Credit Union Steelsands members have voted against being taken over by Credit Union Baywide.

The deal rejected by Steelsands members was endorsed by their board, and would’ve seen Steelsands join Aotearoa Credit Union, Credit Union Central and Credit Union South in a transfer of engagements under the Friendly Societies and Credit Unions Act to Credit Union Baywide. 

“The Transfer of Engagements was subject to, among other approvals and regulatory consents, the approval of the members of Steelsands Credit Union. At the meeting of 14th March 2019, the members of Steelsands Credit Union considered the Transfer of Engagements, and elected not to pass the special resolution necessary to approve the Transfer of Engagements and authorise the board of directors of Steelsands Credit Union to implement the merger,” Steelsands says.

“Accordingly, Steelsands Credit Union will not proceed with the Transfer of Engagements contemplated by the Heads of Agreement and Transfer Agreement. It was intended that the Transfer of Engagements would take effect from 1 May 2019. While Steelsands Credit Union will not proceed with the Transfer of Engagements, it is understood that Credit Union Baywide and any Transferring Credit Unions may carry out the Transfer of Engagements notwithstanding this.”

Indeed the Steelsands rejection in itself doesn’t mean the deal is off for the other credit unions. Baywide may accept a transfer of engagements from only some of the proposed merger partners if members of one or more credit union vote against the deal. Baywide members were due to vote on the deal on Friday evening. Members of Aotearoa Credit Union, CU Central and CU South all voted in favour of the transfer of engagements to Baywide last week.

 “In conjunction with the entry into the Heads of Agreement and the Transfer Agreement, Steelsands Credit Union entered into a Liquidity Facility Agreement on 20 December 2018 with the other Participating Credit Unions, that enables Aotearoa Credit Union to borrow up to $1,250,000 from the other Participating Credit Unions – ‘Liquidity Facility Agreement’ – in order to provide it with the funding it expects will be required in the period leading up to completion of the Transfer of Engagements. All moneys drawn by Aotearoa Credit Union under the Liquidity Facility Agreement are therefore repayable by 1 May 2019. Moneys payable under the Liquidity Facility Agreement are unsecured, ranked behind, and are subordinated to, the moneys payable under the trust deed of Aotearoa Credit Union,” Steelsands says.

Steelsands Credit Union is an industrial based credit union. Its head office is at NZ Steel Ltd at Glenbrook. Steelsands’ four branches are all at industrial sites including Refining NZ at Marsden Point, NZCU NZME which operates from the Glenbrook office, and the Alliance Group Lorneville Meat Processing Plant, near Invercargill.

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