The troubled RAMs Home Loans has a saviour. The Westpac Bank will buy its distribution franchise for $140 million. Westpac will also provide about $1.5 billion to RAMS to help refinance its short-term debt program.
Westpac will take the RAMS brand name, its 53 franchises and all new business from November 15 but RAMS will keep the $14.5 billion mortgage book.
RAMs was caught up in the US sub-prime mortgage crisis after it listed on the Australian Stock Exchange in July and has struggled to find long term financing as a result.
Yesterday RAMS closed at 85¢ after an initial public offer price of $2.50. The market reacted to today’s news by stripping another 17¢ off RAMS shares, to 68¢ by 12.35pm.
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Westpac’s offer is subject to approval at a RAMS shareholder meeting, scheduled for late November.