BAE shareholders agree to IFRS carve outs

BAE Systems’ shareholders have voted overwhelmingly in favour of amending their borrowing rules to strip out the effects of certain international accounting standards.

Link: BAE prepares to acquire US rival

In an EGM held earlier today, 99.35% of the votes supported BAE’s proposal to ignore the impacts of IAS19, IAS32 and IAS39 when determining whether the company has exceeded the borrowing threshold prescribed in article 104 of its articles of association.

Under IFRS, BAE’s shareholder funds fell from £4.7bn to £3.1bn, which would have hindered attempts to raise capital as the group’s previous articles of association only allowed loans equivalent to one-and-a-half times the company’s adjusted capital and reserves.

The result of today’s EGM has opened the way for BAE to go forward with its £2.1bn bid for US competitor United Defence Industries, which may have been cast into doubt had shareholders not approved the amendments to BAE’s borrowing rules.

Shareholders have also given their blessing for the UDI takeover, which has received the approval of regulatory authorities in the US, Sweden, Turkey, Germany and Norway.

The US justice department, however, is reviewing the transaction because of legislative requirments in the US.

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