Jul 2011 Financial News

William McConnell makes bold move to acquire Lascelles

Jul 29, 2011

Former managing director of local conglomerate Lascelles DMercado William Mc Connell has staged an audacious move to acquire the company he once headed and return it once again to a sound financial footing.

A consortium comprising of William McConnell, Pan-Jamaican Investment Trust, a hedge fund out of New York called Octavian, and other Caribbean investors going under the name of Black Sand threw the gauntlet down by announcing its intention to acquire not less than 90 per cent of the ordinary shares and all of the 6 per cent preference shares and all the 15 per cent preference shares of Lascelles deMercado. Pan Caribbean Financial Services is principal broker to the takeover bid. The offer will be made on the following basis: ordinary shares-US$3.86, 6% cumulative preference shares US$0.29 and 15% cumulative preference shares at US$0.23. This offer will be formerly launched on July 29,2011 and unless extended will close on September 19 subject to extension in accordance with the rules of the JamaicaStock Exchange. The offer document will be made available to shareholders of the company on or about July 29,2011

Back in 2009, Lawrence Duprey's CL Financial acquired Lascelles for around US$750 million The following year CL Financial Group went bust by over extending itself and had to be rescued somewhat by the Government of Trinidad& Tobago.Earlier this week, July 24, CL defaulted on US$342 million of notes issued in Trinidad and Jamaica which are secured by a pledge of CL's shares in Lascelles. Black Sand is riding to the rescue as a white knight with the believe that Lascelles is in serious trouble with these continuous defaults and that it is in dire need of stabalisation.

Casper Johns of Surbiton Securities said: " The price offered by Black Sand will be sufficient to repay the noteholders both principal and interest. The offer is contingent on two things: all directors immediately remove themselves from Lascelles Board with the exception of Fraser Thornton and the independent Jamaican directors. The other is that McConnell can go in and conduct a due duilligence excercise on the company. The stated objective of Black Sand is to stop further value destruction of Lascelles and restore confidence in order to boster shareholder value. The offer document alludes to stabalising the company while seeking to monetise its subsidiary businesses. Lascelles is being used as collateral for a loan and decisions are being made on that dynamic rather than for its general well being.. The note holders have watched as CL has raided Lascelles of its cash. It's resouces have been used to pay interest on the debt while the principal remains the same. This only serves to destroy the value of the company. I don't imagine that most minority shareholders will go for this offer. The Trinidadian noteholders who are the National Insurance Board of Trinidad and the Trinidad& Tobago Unit Trust together hold about US$240 million of notes. They both may opt to give CL more time but they have a fiduciary responsibility to their shareholders and that would mean quickly accepting Black Sand's offer."

Bryn Thomas formerly of Wells Fargo added: "This is a clever move and in effect means that Lascelles which was sold to CL Financial two years ago for around US$750 million could be snapped up by Mc Connell and his merrymen for around US$350 million, that's about half the price. Somehow I don't think the Trinidadians would go for it. It reminds me of that derisory offer that was made for NCB by a consortium made up of the cream of Jamaica's old business elite before Lee Chin stepped to the plate."


Source:
BY AL EDWARDS
Jamaica Observer
Friday July 29, 2011

http://www.jamaicaobserver.com/business/William-McConnel-makes-bold-move-to-acquire-Lascelles_9329701#ixzz1TVIKVIXd