Dec 2006 Financial News

Some DB&G shareholders still awaiting payment from BNS

Dec 13, 2006

Several shareholders who had pledged their Dehring Bunting & Golding (DB&G) stocks to the Bank of Nova Scotia Jamaica (BNSJ) were still waiting for their cheques yesterday, one day beyond the expected payout deadline.

"Clients have called our offices hopping mad. They expected to collect their cheques on Monday. Even if it comes today (Tuesday) it still looks bad," said a broker who spoke on condition of anonymity.

"My broker encouraged me to sell at $21.08 in good faith that BNS would pay me off quickly. Now the stock is at $26 and I still don't have any money," said an investor who, up to yesterday, was waiting on a cheque for $30 million.

The offer price was, at October 20, a premium of 8 per cent above the DB&G market price as at October 13, 2006. However, since then, the stock has moved by 24.3 per cent above the offer price and closed at $26.20 yesterday.

Despite their anger at not receiving their cheques, none of the shareholders with whom the Business Observer spoke had any doubt that BNSJ would pay. The transaction, valued at C$85 to C$90 million, will be financed by its Canadian parent company, Bank of Nova Scotia.

When the Business Observer contacted both Scotia Investments and the local corporate communications department, we were told that the matter was being looked into. On November 29, BNSJ announced that it would accept all the DB&G shares pledged even though the expected amount would be less than the 75 per cent minimum that Scotiabank had said it would need to finalise its buyout of DB&G.

With the passing of the December 11 deadline, BNSJ is now the majority shareholder of the investment brokerage house. The original November 29 deadline was extended by two weeks after much public debate within the brokerage community on whether or not to sell to BNSJ. Several significant investors such as John Jackson, Richard Byles and Christopher Berry told the media, on separate occasions, that the idea of the combined forces of DB&G and BNSJ was an excellent concept.

However, Jackson was the first to come out and state that the offer price was too low and should have come in between $30 and $40 per share. Other brokers, speaking on condition that they not be named, said that they would hold their shares because the combination was a good one and would drive DB&G's share price upward.

"With the addition of Scotiabank funds, it will not be hard for DB&G to make profits of over $1 billion next year and grow by 20 per cent per annum," said one broker. "I would like to have my portfolio enjoy some of that upside."

To convince his fellow brokers to pledge their shares, Peter Bunting, chairman of DB&G, said in a recent edition of the Caribbean Business Report that, "Everybody wants to get to Heaven, but no one wants to die".

With the DB&G deal on the verge of completion, BNSJ can now focus on building its wealth management division. "We are so far behind, it makes more sense to buy," William 'Bill' Clarke, president of BNSJ, has been reported as saying on more than one occasion. Financial analysts believe that Jamaican investors have become very sophisticated and BNSJ does not sufficiently cater to this market. With the acquisition effectively complete, this is expected to change.

DB&G, the fourth largest security dealer in Jamaica and now a part of the BNS family, brings 23,000 clients to the table and nine offices across Jamaica and the Caribbean.

Source:
Dennise Williams
The Jamaica Observer
Wednesday, December 13, 2006

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