RBTT Financial is subject to a TT$343 million (US$55 million) break-up fee if shareholders give the thumbs down to the Royal Bank of Canada acquisition, but the penalty is only triggered if the Trinidad company were to give in to another suitor within a year.

Bourse Securities, a Port-of-Spain brokerage, said the condition could have implications for the wider market because of the limitations it would place on RBTT, a stock that drives the local exchange.

RBTT's market capitalisation at the end of 2007 represented 13 per cent of the combined value of companies listed on the Trinidad and Tobago Stock Exchange, said Bourse.

Over the last three years, the value of RBTT trades has amounted to TT$2 billion (US$320 million) while the assets of the Trinidad operations of the financial group constituted almost 39 per cent of the total assets of the local banking system at the end of March 2007.

Bourse Securities said the TT$343 million penalty would be triggered were RBTT to consider and/or approve any other offer prior to the expiration of 12 months, if shareholders voted against the deal at the March 26 special meeting.

"This seems to be a high penalty for which the directors have bound the company and which may not be in the best interest of shareholders if a more favourable deal comes along after the meeting date," said the brokerage.

business@gleanerjm.com