MCU Ltd is facing legal action from Ezifin over an aborted takeover bid.

“Members would be well aware of the frustrations we experienced during the year with the proposed transfer of the business to Firstmac being stalled for a considerable period of time and then ultimately refused by Treasury in March 2020,” Sarah Davies, chair of Maleny Credit Union wrote in the annual report.

“That refusal related to Firstmac’s desire to be a 100 per cent owner of MCU, as legislationprevents any individual or company from owning more than 20 per cent without approval.

“The Board then sought to find a purchaser for the business who could satisfy the requirements of the legislation and entered into an agreement with Ezi Financial Services Pty Ltd (Ezifin).

“Unfortunately, that transaction also came to an end as Ezifin was not able to perform its obligations under the agreement in the timeframes required by MCU to meet its prudential requirements.”

On 2 September 2020, MCU issued a notice of termination to EziFin.

“EziFin have subsequently commenced proceedings in the Supreme Court of Queensland,” Davies told members.

“EziFin continue to pursue the matter and MCU intends to defend the matter to the fullest extent possible,” she said.

Later in September, MCU issued an information memorandum “to several potential merger partners that operate under APRA regulation [and] MCU is currently progressing merger discussions with a preferred merger partner,” Davies said.

Davies also explained to members the dilemmas of tiny scale faced by MCU.

“While your credit union’s total assets have grown by 7 per cent over the prior year, our loan book has contracted by nearly 13 per cent, thereby reducing the credit union’s income,” she said.

Loans fell 13 per to A$27.9 million

“Loans growth was impacted by the requirement to obtain APRA approval on loans that are considered to be large exposures. This limit is relatively low compared to the market for housing loans in the community.”