Westpac Banking Corporation has fulfilled its commitment to fund up to half a billion dollars for RAMS home loans, with the funding agreement coming into effect today.
Australia's first bank has secured $500 million which will be used to fund all new loans settled by RAMS until the official completion of Westpac's acquisition of RAMS' distribution business.
However, Westpac said funding will cease if RAMS shareholders vote against the proposal at their annual general meeting on Monday, 26 November 2007.
"Westpac is working closely with franchisees to minimise disruption to their businesses and to provide support during this transitional period," group executive Mike Pratt said.
Westpac acquired the brand and franchise operations in the troubled mortgage business for $140 million last month, but was careful to distance itself from its existing mortgage book.
As a result, the proposal is not deemed to be a takeover.
Under the arrangements, RAMS Home Loans Group will continue to trade on the Australian Stock Exchange.
Aspects of the business which will be governed by Westpac is the franchise network under the RAMS brand, however it will be kept separate from existing Westpac channels.
"These arrangements minimise disruption to RAMS customers, franchisees and employees," Westpac said in its original statement of the acquisition on 2 October.
In addition, Westpac chief executive officer David Morgan said:
"We will retain and support RAMS' current management, including CEO, Greg Kolivos to drive further growth."
ACCC commenced review under the Merger Review Process Guidelines and is proposed to announce its findings on 21st November 2007.
Shares in Westpac lost 23 cents to $27.99.
