Apr 2004 Financial News

Guardian wants to sell its 20% of Pan Jam

Apr 14, 2004

Guardian Holdings Limited (GHL) the Trinidadian parent of Guardian Life Jamaica, which snapped up 20 per cent of Pan-Jamaican's shareholding at the height of the stampede of Trinidadian investors in the local market, is now ready to offload the entire block of shares.

The Trinidadian company has apparently become uneasy with the close relationship that has been forged between the Pan-Jamaican Group and Life of Jamaica (LOJ) - the Jamaican insurer which is now the main rival of Guardian Holding's Jamaican subsidiary.

Pan-Jamaican's subsidiary, First Life Insurance Company, recently announced a merger with Life of Jamaica.

Yesterday, Guardian Holdings chief financial officer, Howard Dottin acknowledged that there was some apprehension about the ownership arrangements.

"Now that there is a relationship between LOJ and Pan-Jam, I'm not too sure there's enough space for us (GHL)," Dottin told the Business Observer. "If we get a good price for it the probability (of GHL selling its Pan-Jam shareholding) would be great."

Importantly, not only is Life of Jamaica, Guardian Life's principal competitor in this market, but its 76 per cent Barbados owner - Sagicore - is Guardian Holdings' main competitor at the regional level.

Dottin said yesterday that the size of GHL's shareholding in the Pan-Jam Group could allow it to command a premium price in any transaction. "The acquisition of a 20 per cent shareholding is really a strategic purchase for any company," he noted.

With 172.119 million shares in issue and a closing price of $39.98 at the end of trading yesterday, Pan-Jamaican has a market capitalisation of $6.88 billion. Guardian Holdings' 20 per cent shareholding is therefore worth $1.376 billion.

Dottin suggested yesterday that the sale of the block of shares held in the Pan Jam Group was part of a move to tidy up the organisation as a prelude to looking outside the region for acquisition opportunities.

"We've been tidying up our whole structure to prepare us for extra-regional growth," he said. "We are a company in acquisition mode now."

The sale now being contemplated would follow last year's streamlining at GHL in which the group reduced its shareholding in another publicly-traded Trinidad company - RBTT - from just over 20 per cent to 14 per cent. With that reduction, Guardian's stake in RBTT was downgraded to that of "an investment, rather than an associated company", according to Dottin.

During the same period, RBTT Financial Holdings exercised its option to upstream its 20 per cent interest in two GHL subsidiaries - Guardian Insurance Limited in Jamaica, and Guardian General Limited in Trinidad.

With RBTT now holding a direct stake in the parent company, Guardian was able to make the two subsidiaries, wholly-owned subsidiaries.

Guardian Holdings Limited was in February ranked the 4th largest listed company on any of the exchanges in the Caribbean - after RBTT Financial Holdings, FirstCaribbean International, and Republic Bank, all Trinidadian institutions.

Source: Jamaica Observer
http://www.jamaicaobserver.com/magazines/Business/html/20040407T000000-0500_58213_OBS_GUARDIAN_WANTS_TO_SELL_ITS_____OF_PAN_JAM.asp