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Transport Friendly Society moves towards demutualisation

Transport Health’s parent, the Transport Friendly Society (TFS), has called a meeting for members to vote on demutualisation.

If approval is given on April 2, TFS will demutualise on June 30.

In the society’s demutualisation proposal, obtained by Life+Health, TFS directors back the move, citing falling membership and the need to borrow money to develop the business.

TFS says membership has declined to about 4700 from 5300 in the 1990s.

“As membership declines, this reduces the viability of TFS to continue to operate effectively,” the proposal says.

To grow its business, including the health fund, the society needs to raise extra capital, which it cannot do under the friendly society structure.

Its key objectives for the next five years include growing membership, developing a profitable business and eliminating the day-to-day financing required by the core businesses in the health fund.

“The TFS board strongly believes the decision to demutualise will improve the strategic direction of the company,” the proposal says. “In turn, this will increase the profitability and value of the company and should therefore deliver value in the long term to its members.”

The board plans to list the company on an approved stock exchange within three years if the demutualisation goes ahead.

“The period of three years is expected to provide the company with sufficient time to ensure it has adequately prepared, has appropriate operating and compliance procedures in place and is in a position to list.”

The cost of demutualisation is estimated at about $775,000, including possible listing fees.

Health fund members will receive 100-400 shares, depending on their level of cover, and a similar figure depending on years of membership.

This could mean some members will receive thousands of shares with a net asset value of $1.89 each.

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