By Al Edwards, Business Co-ordinatorTHE DYOLL Group, which has interests in general insurance and coffee production, has signed a Memorandum of Understanding (MOU) with the Financial Sector Adjustment Company (FINSAC) to buy back the 16 million ordinary shares sold to FINSAC to bail out its subsidiaries Dyoll Life and Buck Securities, both of which the Group eventually lost.
In 1998, the shares were valued at $135 million.
The Group's obligation to FINSAC represents a 10-year, 12.5 per cent convertible redeemable investment instrument issued by its subsidiary to FINSAC. The instrument was due to mature on December 14, 2008 and was secured by a variable rate promissory note issued by FINSAC.
FINSAC has made it clear that both interest and principal will accumulate until maturity, at which time the total sum payable will be converted at market value into ordinary shares of the subsidiary.
Giving Dyoll an opportunity to regain control of its destiny, there is a stipulation it has the option to redeem a part or all of this instrument, plus interest due at any time after year five and up to 90 days after the maturity date, provided that there is adequate surplus in a capital redemption reserve account.
Dyoll's chief financial officer, Catherine Parke-Thwaites, speaking with The Gleaner last year, said: "It has always been the Group's intention to complete repayment before schedule and by the end of this year. The first deadline was set for the year 2004. FINSAC can, if we fail to meet the deadline, convert its stake into preference shares and subsequently to ordinary shares, which would make the Group susceptible to corporate predators.
"FINSAC holds a 26 and a half per cent stake in the Group and we would like to have the option of reclaiming its holdings in the Group on redemption of the investment instrument."
FINSAC has received offers
for its holdings in the Dyoll Group from companies both at home and abroad, but to date has not indicated a desire to sell to a third party.
Mrs. Parke-Thwaites, speaking with Wednesday Business yesterday, said: "We borrowed the $135 million from FINSAC to restructure the Group and it has become our integral business partner. We have taken measures to return the Group to profitability, such as the sale of assets and staff redundancy exercises. In 1999, we returned to profitability and the following year decided to take steps to reduce our level of debt. In 2001, Dyoll reduced its debt to $52 million and in December of that year made a payment of $20 million, consisting of principal and interest. The 3,200 shareholders have now put forward a proposal to buy back those FINSAC shares."
Mrs. Parke-Thwaites said the board has put forward the proposal on behalf of the 3,200 shareholders and, if accepted, "it will mean that we will cease to have the Government as a business partner and it will put us back in the private sector. It also removes operational restrictions and we can now raise capital - it is a big step for us."
Dyoll Group, Chief Executive Officer, Paul Bicknell, added: "To facilitate the buy-back of the ordinary shares in Dyoll Group and the final liquidation of the Dyoll Insurance investment instrument, the companies, along with Dehring Bunting and Golding (DB&G) and FINSAC, have entered into an arrangement, governed by the preliminary terms outlined in a MOU."
DB&G has been mandated by the Dyoll Group to act as exclusive financial advisors and investment bankers to the Group in connection with this offer.
