Jan 2010 Financial News

Sagicor CEO explains Barbados transaction

Jan 07, 2010

Sagicor Financial Corporation’s (SFC) private placement of Bds$39 million worth of shares to the National Insurance Board of Barbados was part of its 2009 business plan, which included capital raising to finance acquisitions in the United States and the United Kingdom, said Dodridge Miller, SFC president and chief executive officer. Miller said Sagicor’s 2009 business plan included a capital raising by way of new equity to be issued in Barbados, T&T and the United Kingdom. “This new capital is required to finance our further expansion, primarily in diligently selected opportunities in the United States and the United Kingdom,” Miller stated. “After several months of working on the plan, we, along with our advisers, formed the view that market conditions were not appropriate for capital raising.

“Companies that had proceeded with a plan to raise capital did so at substantial discounts on their share price ranging from ten per cent to 30 per cent. “The board believed that this was not in the best interest of our shareholders and, therefore, postponed the capital raising exercise, and adjusted our business plan accordingly. “However, we conducted preliminary discussions with significant long-term institutional investors in both Barbados and Trinidad to gauge their appetite to participate in an equity issue. “The private placement to the Barbados National Insurance Board was the culmination of these discussions,” Miller stated. SFC said last weekend it had issued 11,766,705 shares to the National Insurance Board of Barbados at a price of Bds$3.325 per share via private placement.

Rights issue

On the question of why SFC had not made a rights issue, Miller said SFC’s board and management had considered it, but “concluded that this approach was unlikely to produce the results expected.” “However, we have not ruled out a rights issue should shareholder interest and market conditions suggest that this is a viable option,” the statement read. Addressing the issue of what effect the private placement would have on existing shareholders, Miller said the laws of Barbados permit directors to issue new shares by means of a private placement without shareholder approval, and without first offering the shares to existing shareholders. “The natural effect of such a transaction would be some reduction in the percentage ownership of existing shareholders.

“In this instance, the private placement had the effect of diluting existing shareholders shares by four per cent of their previous holdings,” Miller stated. Miller said Sagicor is not in financial difficulty. “Sagicor is in good financial health. As at the end of our third quarter September 30, 2009, our total capital stood at US$661 million, increasing from US$581 million at the end of 2008, entirely by internal growth and without any new capital injection,” Miller said in a statement issued yesterday. “Both AM Best and S&P cite our continued capital strength in determining our rating, which remains investment grade at “A” Excellent (AM Best) and BBB (S&P), respectively,” Miller said.


Source:
Sandra Chouthi
Trinidad Guardian
Thursday January 7, 2010

http://guardian.co.tt/business/business/2010/01/07/sagicor-ceo-explains-barbados-transaction