Byles
LIFE OF Jamaica Limited (LoJ) headed by Richard Byles has signed irrevocable 'Lock-up' agreements with the following stockholders in Pan Caribbean Financial Services Limited (PCFS) to acquire all their shares in PCFS. The 'Lock-up shares', in question are:
Industrial Finance Holdings Limited (IFH) 24.9 per cent, British Caribbean Insurance Company Limited (BCIC) 7.4 per cent, Raiders Limited 10.7 per cent
INSURANCE PORTFOLIO
LoJ currently holds or controls approximately nine per cent of the capital of PCFS and, by a transaction previously announced, it has contracted to acquire from First Life Insurance Company Limited (First Life) its insurance portfolio and a further 37 per cent of PCFS (the First Life transaction).
The First Life transaction is awaiting approval from the Financial Services Commission (FSC).
Completion of the Lock-up agreements would result in LoJ acquiring an interest in more than 50 per cent of the issued capital of PCFS.
LoJ intends to limit its ultimate ownership in PCFS to 51 per cent and will arrange to have the remaining shares allotted to its parent company, Sagicor Financial Corporation. In compliance with the Securities (Take-overs and Mergers) Regulations, 1999 and the Rules of the Jamaica Stock Exchange, LoJ will be making a mandatory cash offer to other shareholders of PCFS on the same terms and conditions on which it will acquire the Lock-up shares.
The offer will be made at the same price at which LoJ will acquire the Lock-up shares which is US$0.2344 per share payable in Jamaican currency at an exchange rate which shall be the mid-point between the weighted average spot purchase rate and the weighted average spot sales rate of the United States dollar as published by the Bank of Jamaica on the day on which the PCFS shares are actually transferred to LoJ ('the Agreed Exchange Rate'). Thus, if the Agreed Exchange Rate is say US$1 = J$62, the price per share would be J$14.53.
Upon the offer being made, IFH, BCIC and Raiders have each irrevocably agreed to accept the Offer. Completion of the transaction will be subject to certain conditions, including:
(a) Approval of the minister of finance and planning under Section 21 of the Financial Institutions Act (because Pan Caribbean Merchant Bank Limited, a subsidiary of PCFS will come under the indirect control of LoJ); and
(b) The FSC, upon being formally notified of the proposed transaction pursuant to Regulation 7 (1) of the Securities (Conduct of Business Regulations), 1999, not having issued any notice of objection.
LoJ is making this Offer for the sake only of complying with the Securities (Takeover and Mergers) Regulation, 1999 and the Rules of the Stock Exchange which compels it to make an offer to all PCFS shareholders. The blocks of shares which LoJ has contracted to acquire from IFH, BCIC and Raiders are large and the price has been discounted to recognise the fact that a simultaneous sale of such large blocks on the market would severely depress the share price. Accordingly, other holders of PCFS shares should carefully consider their options and secure professional advice, if necessary, before accepting the discounted offer price which LoJ will be offering to them.
DIRECTOR'S CIRCULAR
The regulations and the rules of the Stock Exchange require that the directors of PCFS issue a director's circular to the shareholders of PCFS expressing its opinion on LoJ's offer and providing guidance to the shareholders. If the First Life transaction and the acquisition of shares from IFH, BCIC and Raiders are completed, LoJ has no intention of de-listing PCFS or making any material change in the management or operations of PCFS. If the Lock-up agreements are completed, directors Joseph M. Matalon, Cristina Matalon and O.K. Melhado have indicated that they intend to resign their directorships from the boards of PCFS and its subsidiaries. Peter Melhado, a director of PCFS and PCMB who is connected to IFH, BCIC and Raiders, has agreed to continue to serve on the boards of both PCFS and its subsidiaries. This announcement is not an assurance or guarantee that the proposed transaction will be completed as it is subject to several conditions including those specified above.
The formal Offer document will be dispatched by LoJ as soon as practicable. This purchase by LoJ and its parent Sagicor represents a major investment by the two companies valued at more than US$50 million and reflects their confidence in Jamaica and commitment to developing a Caribbean-wide banking operation.
RESPONSE FROM IFH, BCIC AND RAIDERS
Joseph Matalon, chairman of the ICD Group of companies, of which IFH and BCIC are members, in responding to the press announcement of the pending sale of shares in PCFS, commented that: "The Group's withdrawal from the banking industry is in keeping with its strategy to divest non-core investments and employ the proceeds to seek out new opportunities as well as to reduce Group indebtedness.
"I would like to thank our employees, some of whom have been involved from the inception of Sigma through to Manufacturers Sigma and now PCFS, who have played the pivotal role in building on modest foundations to be part of a financially strong entity with a reputation for excellent customer service."
Peter Melhado, the former CEO of Manufacturers Sigma and a representative of Raiders, echoed Mr. Matalon's comments, adding: "I have had the privilege to be associated with a wonderful group of people over the years and combined with the superb team at PCFS, I am convinced they will go on to achieve even greater things."
