Sep 2012 Financial News

CL Financial sells US$338m stake in Lascelles deMercado

Sep 04, 2012

Government-controlled CL Financial yesterday agreed to sell its 81.4 per cent ownership stake in Lascelles deMercado to the Italian spirits company Campari for US$338 million in a transaction that values 100 per cent of the Jamaican conglomerate’s rum assets at US$414.7 million (or TT$2.6 billion). The assets being sold by CL Financial consist of Lascelles deMercado’s spirits business, led by its rum range, including Appleton Estate, Appleton Special/White, Wray & Nephew and Coruba, the related upstream supply chain, as well as a local distribution company. Specifically, the transaction includes all related production, sales and distribution in the domestic and international markets as well as ownership and cultivation of sugar cane fields and manufacture of sugar and molasses used in the production of rum. The sale excludes non-core assets primarily insurance, transportation and investments which CL Financial is looking to divest seperately. A statement yesterday from Campari on the Web site of the Jamaica Stock Exchange indicated that the acquired business achieved total pro-forma sales of US$277 million and a pro-forma EBIDTA (earnings before interest, taxes, depreciation and amortisation) of US$27.7 million for the 12 months ending June 30, 2012.

The transaction places a value of US$4.32 per ordinary share and US$ 0.57 per preference share and the consideration will be paid in cash. The price per share corresponds to an historic multiple of 15 times the most recent recent It is expected that the transaction will close in the fourthg quarter of 2012. Reuters reported yesterday that Campari’s strategy in acquiring the Lascelles rum portfolio “echoes that of bigger groups like Diageo and Pernod Ricard, which have been upbeat as strong international markets compensate for Europe.” The wire service noted that Diageo for instance raised its dividend last month, confident that buoyant demand for whisky and spirits in Asia and Africa would help it hit medium-term targets. Campari’s Bob Kunze-Concewitz, chief executive, said: “When completed, this acquisition will give a further boost to the internationalisation of Gruppo Campari, further expanding our business outside of Italy, as well as strengthening our largest and most profitable business, the spirits segment.”

There was no statement on the sale from CL Financial, the troubled T&T-based conglomerate that the former PNM administration took control of in June 2009 following the collapse of its subsidiary, Clico, the insolvent insurance company in January 2009. A shareholders’ agreement between the Government and CL Financial in June 2009 allowed the State to appoint four directors on the seven-member CL Financial board, which in effect gives the Government control over CL Financial. Calls to the cellphone of CL Financial chairman, Gerald Yetming, went unanswered yesterday. Apart from being the chairman of CL Financial, Yetming also chairs the boards of Clico, Angostura and Home Construction and he sits on the board of Methanol Holdings (Trinidad) Ltd.
The shareholders of CL Financial voted in June to extend the shareholders’ agreement by six months until the end of 2012 to allow the Government enough time to make a claim against the conglomerate for the multi-billion bailout of Clico. Clico, which is being managed by the Central Bank under section 44 D of the Insurance Act, owns 2.5 million Lascelles shares, while Angostura, the publicly listed, T&T-based rum and bitters producer, is listed as owning 2.8 million shares in the Jamaican company.


Source:
Trinidad Guardian
Tuesday September 4, 2012

http://www.guardian.co.tt/business/2012-09-03/cl-financial-sells-us338m-stake-lascelles-demercado