Aug 2011 Financial News

Lascelles derides takeover bid as speculative, opportunistic

Aug 17, 2011

Directors of conglomerate Lascelles de Mercado (LdM) says the hostile takeover bid by rivals Black Sand Acquisition Inc lacks evidence of capital and could strip the group of its profitable Appleton rum brand.

The board advised shareholders to hang on to the stock amid its six per cent rise in the month of August on two days of moderate trading.

"There is no evidence that Black Sand has the funding in place to complete the purchase of the shares," noted a statement issued in the form of a press advertisement Friday by company secretary Jane George.

"It does, however, state itself to be 'highly confident' of securing US$270 million subject to certain undisclosed conditions, as well as a highly subjective condition requiring completion of satisfactory due diligence."

Lascelles is a subsidiary company of Trinidad-based CL Financial. Black Sand earlier this month made a "US$3.86 per share bid to acquire LdM. However, there is no clear statement as to what Black Sand intends to do with LdM, its businesses and employees if it obtains control," Lascelles said.

"It does, however, speak of a series of possible transactions, including the possible sale of a major subsidiary. This appears to suggest that the LdM group would be broken up and the parts sold off to the highest bidder, including J. Wray & Nephew Limited and the iconic Appleton brand," the company said.

Additional queries to Lascelles were unanswered up to press time.

Lascelles made J$536.7 million profit for its June quarter 2011, or 47 per cent more than the same quarter a year earlier. The conglomerate made 56 per cent of its profit from its liquors, rums, wines and sugar division, followed by its investments division, general insurance division, general merchandise division and transportation services division.

Black Sand's bid for Lascelles' ordinary and preference shares is valued at US$334m to US$371m.

The Lascelles board, which is chaired by Trinidadian Gerald Yetming, stressed that shareholders should hold their shares as the Black Sand offer was undervalued.

"The directors believe the unsolicited and unfunded Black Sand Offer significantly undervalues LdM and is an opportunistic attempt by a former director to persuade CL Financial's noteholders to foreclose on the LdM shares held by them as collateral and sell them to Black Sand for less than half the price paid for them by the CL Financial group. The board does not believe this highly speculative and conditional offer to represent a meaningful offer at all," the statement read.

Black Sand, a newly formed group of investors with William 'Billy' McConnell at the centre, says it has financial backing "from a group of sophisticated investors" led by Octavian Special Master Fund, LP and Pan-Jamaican Investment Trust Limited, as well as other Caribbean investors. Black Sand, which is registered offshore in St Lucia, has also disclosed an alliance with Greystone Equity Partners Inc, which it refers to as its sponsor.

"The offer is unfunded and remains subject to due diligence," said Lascelles. "There is no guarantee that Black Sand will, therefore, be able to implement the offer: Black Sand is in effect seeking a free option to acquire the shares of LdM."

The board of directors of Lascelles has asked for an extension from the Financial Services Commission and the Jamaica Stock Exchange of the time period within which it must file the directors' circular, in order to properly prepare the required fairness opinion and valuations.


Source:
steven.jackson@gleanerjm.com
Jamaica Gleaner
Wednesday August 17, 2011

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