Nov 2006 Financial News

Byles says his firms haven't yet decided whether to sell DB&G shares

Nov 01, 2006

Life of Jamaica (LOJ) boss Richard Byles says that the companies under his leadership that hold a huge chunk of shares in Dehring Bunting and Golding (DB&G) have not yet decided whether to sell their stake to Scotia Bank which has made a purchase bid for the investment house.

"We have not made a decision," Byles told the Business Observer this week. "What I will say is that we have not had a chance to present the pros and cons. I don't want it said that I have come to a decision. I am not even going to give a hint at how I am leaning on this matter."


Source:
The Jamaica Observer
Dennise Williams
November 01, 2006


http://www.jamaicaobserver.com/magazines/Business/html/20061031T220000-0500_114730_OBS_BYLES_SAYS_HIS_FIRMS_HAVEN_T_YET_DECIDED_WHETHER_TO_SELL_DB_G_SHARES.asp


Byles was responding to a Business Observer report last week quoting reliable sources as saying that he could hold the swing vote that makes or breaks the deal.

Byles is the president of LOJ and chairman of Pan Caribbean Financial Services (PCFS).
Life of Jamaica's Pool Equity Fund No 1 and PCFS's Sigma Optima Unit Trust together hold about 25 million shares in DB&G. Additionally, LOJ's parent company, Barbados-based insurance conglomerate, Sagicor, is also a significant shareholder in DB&G.

Through these connections, Byles has influence over eight per cent of DB&G which, should he decide to accept the terms of the deal, could push BNS' control to nearly 50 per cent and influence other shareholders to sell.

On October 20, BNS and its local subsidiary, Scotia Jamaica, formally announced their bid to acquire between 75 and 80 per cent of the shares in DB&G.
The offer is a cash bid priced at J$21.08 (C$0.36 and TT$2.00) for each share of DB&G acquired.
But while BNS controls 40 per cent or 124.8 million DB&G shares through a lock up agreement with 11 shareholders lead by DB&G chairman Peter Bunting, the deal will not be consummated without the co-operation of other major shareholders such as Byles.

"I have a responsibility to three boards to present the case whether we sell or not," Byles explained. "I have a responsibility to my LOJ pension fund beneficiaries, my unit trust holders and the board of Sagicor. It will be on the basis of my presentation that a decision will be made."

That decision is likely to be influenced by the impact that DB&G has on the portfolios held by the Byles companies.
Based on the fact that BNS president William 'Bill' Clarke has suggested that it was too late for BNS to start a securities company from scratch, financial analysts are speculating that the commercial bank may stretch the offer price.

However, one analyst told the Business Observer that, "Although BNS will not pay any amount, there is the gamble that Byles could take an easy approach and see how badly BNS wants DB&G".

On October 26, Bunting had said that, "One of the reasons we are selling is that the profit growth exhibited by the securities dealers sub-sector in the last 12 months has topped out". However, the latest DB&G financial results suggest that the company has managed to weather the storm.

DB&G's consolidated net revenue stood at $776 million and $423 million for the six months and quarter ended September 30, 2006 respectively. Net profit after taxation was booked at $338 million and $192 million for the six months and quarter ended September 30, 2006, which represented increases of 12 per cent and 28 per cent respectively over the comparative periods for 2005.

Additionally, the investment house's total funds under management stood at $34.3 billion as at September 30, 2006 (2005: $29.3 billion), which includes trust assets of $5.7 billion (2005: $5.4 billion).