Link Group's UK subsidiary, Link Fund Solutions Limited (LFSL), is now facing a penalty of $85 million for its role as the authorised corporate director of the LF Woodford Equity Income Fund, adding yet another roadblock to the pending takeover of the firm by Dye & Durham (D&D).
The UK Financial Conduct Authority (FCA) has issued a draft warning notice to LFSL relating to its investigation into the collapse of the Woodford fund in which it assessed that the appropriate penalty is £50 million ($85 million).
This is in addition to the redress payment of up to £306 million ($520 million) flagged by the FCA last week and which D&D must agree to cover in order to receive the regulator's approval for its proposed takeover of Link.
In a statement to the ASX on Wednesday, Link said that the draft notice does not represent a final decision but does signal the commencement of the FCA's settlement decision procedure.
“LFSL will explore all options, including engaging in settlement discussions with the FCA, challenging any warning notice that may be issued at the Regulatory Decisions Committee and further through the Upper Tribunal,” the firm said.
“Link Group remains supportive of LFSL considering all such options, and notes that LFSL continues to trade profitably with a leading position in its market.”
Moreover, Link reiterated that it has not made any commitment to fund or financially support its UK subsidiary and that it considers any liabilities related to the Woodford matters will be confined to LFSL.
Earlier this week, D&D put forward a revised takeover proposal comprising an upfront cash payment of $3.81 per share as well as a contingent payment of up to $1.00.
However, the Link board said that it is unable to recommend the new proposal, which is down from the previous offer of $4.81 per share.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.