Nov 2006 Financial News

Byles still indecisive on DB&G sale

Nov 24, 2006

As late as Wednesday evening, entities connected to Richard Byles had not come to a decision on whether or not they should sell their Dehring Bunting & Golding (DB&G) shareholding to the Bank of Nova Scotia (BNS).

On October 20th, BNS and its subsidiary Scotiabank Jamaica announced that it intended to acquire no less than 75 per cent of DB&G by November 27th for J$21.08 per share. The offer is a cash bid priced at J$21.08 (C$0.36 and TT$2.00) for each share of DB&G acquired.
But while BNS controls 40 per cent or 124.8 million DB&G shares, through a lock up agreement with 11 shareholders led by DB&G chairman Peter Bunting, the deal will not be consummated without the co-operation of other major shareholders such as Byles.

"Regardless of our decision, my personal feeling is that I would like the transaction to go through," Byles stated at the Mayberry Investor forum held at the Terra Nova Hotel on Wednesday. "The price is not unreasonable and the deal will benefit the remaining DB&G shareholders one way or another."

Byles is connected to more than 25 million DB&G shares through the Life of Jamaica Pool Equity Fund No 1, Pan Caribbean Financial Services' (PCFS) Sigma Optima Unit Trust and Life of Jamaica parent company, Barbados based, Sagicor. Byles is the president of LOJ and chairman of PCFS.

"The DB&G shares are held on behalf of others such as the Penison Funds and Unit Trusts we manage. The question is what opportunity is there for the remaining shareholders and the chances of the BNS offer being successful," Byles explained. At the forum, Byles said that the relevant shareholders were close to making a decision but would not say in which direction his board of directors were leaning.

"I sent off the report given by the technocrats who looked over the deal. The relevant parties will make a decision soon" said Byles.
Byles' sentiments echo statements made by Christopher Berry and Gary Peart, Mayberry chairman and chief executive officer respectively. When questioned about the deal during the Courts (Jamaica) press conference, Berry stated, "It is an excellent deal."

However, Peart, speaking with this newspaper last week, stated that he is of the opinion that the deal should go through regardless of whether or not BNS acquires 75 per cent of DB&G shares.
"Our research suggests that the Bank of Nova Scotia and [its subsidiary] Scotiabank Jamaica should be able to get at least 60 per cent of Dehring Bunting & Golding (DB&G) shares. If that is true, why should they walk away from the deal?" asked Peart. "When we look at the transaction, the $21.08 offer price is fair to the major shareholders because of the volume they hold. However, it is only natural that smaller shareholders will want a premium. But I am not arguing that BNS should pay more."

Added Peart: "However, based on the way the deal is structured, it will be difficult for BNS to get the 75 per cent it wants. In my opinion, why not do the deal with the 60 per cent already in hand? The fact is, once BNS is on board, whoever is left with shares will do well. There is a lot of value embedded in the company. this deal is about making money. It's an opportunity for all involved."

Speaking yesterday to Caribbean Business Report, Scotiabank Jamaica president William Clarke acknowledged that investors are still sitting on the fence. "People are holding out until Monday, the set deadline," he said. "We are encouraging people to pledge their shares. We won't be increasing the offer price."

However, he did state that, "On Monday we will determine whether to extend or not to extend the deadline. If the DB&G deal goes through or does not go through, it is not the end - we are in a mood to buy."

Source:
Dennise Williams
The Jamaica Observer
Friday, November 24, 2006


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