Issa

Minority shareholders of Pegasus on Tuesday shut down an attempt by National Hotels and Properties (NHP) to amend the procedures used to select the hotel company's board.

In anticipation of a defeat, the NHP had warned that one of its options would be selling the hotel as a going concern.

"In such a case," said company secretary Anna Young, "before doing so, we would summon you to another extraordinary general meeting to get your concurrence for such a deal," she wrote April 20. There was no indication yesterday whether this remained an option.

NHP, a subsidiary of the Urban Development Corporation, failed to even get its special resolution to amend the company's articles put to a vote, but was told instead to first secure a purchaser at the right price before any consideration of 'giving away their rights' to elect members to the company board of directors.

"There is lack of adequate information to adjust the articles and minority rights and there is no certainty that a sale will go through ... cannot recommend to minority shareholders to go ahead," said John Issa, chairman of Jamaica Pegasus in his summary to the meeting.

"There is no haste to change the articles and I don't see why a negotiated sale cannot be made with condition precedents, say 'A. B, C'," he said.

Among the minority partners, the top three are Issa 7.63 per cent, Mid East VenTures 16.5 per cent, and Harry Maragh with 2.49 per cent.

The selection of the board is done in three tiers: majority shareholder NHP names six of 10 directors; minority shareholders select two, and NHP and the minority partners together name the other two.

Better negotiating position

NHP now wants to divest its 59.81 majority interest in the hotel, but sought the amendment to the articles on how directors are chosen as well as the terms of their tenure, arguing that it would provide a better negotiating position to secure the best price for the shares.

Pegasus last traded at $12.50 on the JSE.

The amendment sought would have removed the entrenched rights of all shareholders, including NHP, to nominate or elect directors.

KPMG is working on the valuation of the property.

"We will now move to get the prospectus out so as to ascertain a buyer," said Wayne Chen, chairman of UDC, at the close of the meeting, saying the sale would proceed.

sabrina.gordon@gleanerjm.com