Jan 2008 Financial News

Duprey promises greater value to Lascelles investors - McConnell to remain in

Jan 09, 2008

William 'Billy' Mc-Connell, longstanding CEO of the Lascelles deMercado will remain at the helm of the Jamaican conglomerate for at least three years after its proposed takeover at month end by the Trinidadian firm, Angostura Limited.

The Trinidad company's executive director, Michael Carballo, said in Kingston that McConnell was asked to participate in the company "to build further value in the group."

Angostura, at takeover of Lascelles deMercado, plans to restructure the operation, ostensibly to fully exploit the Appleton brand owned by Lascelles' golden child J. Wray and Nephew Limited.

Restructurings

It is possible, said Carballo, that Wray and Nephew and Angostura would merge under the planned restructuring.

His boss, Lawrence Duprey, chairman of the CL Financial Group, the owner of Angostura, says while both companies are to remain listed on their respective exchanges, he reiterated that they would combine later and launch on one of the big world stock exchanges, possibly London, to raise capital.

But that listing, addedDuprey, should also bring greater returns for shareholders than the regional listings.

What both Carballo and Duprey say that they will immediately bring to the table with the acquisition is capital and an extensive global distribution network that will benefit the rums produced by Lascelles subsidiary, J Wray and Nephew.

"With this process .. it is business as usual; there will be no changes," Carballo told reporters — a statement which analysts suggest was partly aimed at assuaging Jamaican investors that there will be no wholesale shake-up at Lascelles in the immediate future.

"Mr. McConnell will continue ... as chief executive before the closure and even after closure of the deal," Carballo said, echoing remarks he had made earlier at a luncheon for investors and market analysts. "What we will bring to the table is investment."

It is a deal that, on paper, is worth more than US$900 million, which Carballo expects that Angostura will finance with 40 per cent equity and 60 per cent debt.

It is not projected that all current shareholders will take up the offer, and indeed, Angostura has signalled that it does not desire full take-up.

Instead, Duprey has invited share-holders to join Angostura on the "journey to prosperity", virtually guaranteeing that they would see greater returns on their investment once the two companies synergise operations.

OFFER

Angostura has offered US$10.65 a unit for Lascelles' 96 million ordinary shares and US$0.30 a share for its 60,000 six per cent and 15 per cent preference shares.

However, Angostura, plans to pay US$4.50 or some 42 per cent of the offer price up front and defer the remainder for up to three years, with closure of the deal set for February 2011.

The shares tendered under the offer, which closes January 28, will be held in escrow by Citigroup until the second-phase execution of the deal.

Yesterday, Gary Peart, chief executive officer of Mayberry Investments Limited, lead broker on the deal, said so far, the take-up on the offer had been minimal. But Peart also said this was expected as investors had been waiting to hear from Duprey.

Angostura manufactures the world-famous Angostura Bitters and also distils and blends rums in the Caribbean.

Significantly, too, the aggressive Duprey has acquired whiskey distillers in Scotland, as well as a cognac operation in France.

In the process, Angostura has developed a wide distribution network, which it hopes to leverage for the Wray and Nephew brands, particularly its Appleton Estate rums.

For instance, Duprey explained, Angostura has a major distribution facility in South Florida that will be now be open to Wray and Nephew.

"In Tokyo, we are there and we have 40 stores in France," Duprey told Wednesday Business. "We can leverage this network."

Already, Wray and Nephew, which exports over a million cases of rum a year, is now considered the fourth-largest global exporter of rum. And McConnell argues that the the tie-up with Angostura will not only allow it to expand markets, such as in the Far East, but build equity into its brands.

"Nowadays, people don't drink quantity, they drink quality," McConnell told reporters.

Indeed, Duprey argued that bringing Wray and Nephew and Angostura under the same umbrella would allow them to exploit economies of scale.

"For instance, if we want to advertise, we will be able to negotiate on prices, or perhaps if we want to build websites, there is leverage in the negotiations."

Source:
The Jamaica Gleaner
January 9th, 2008

http://www.jamaica-gleaner.com/gleaner/20080109/business/business2.html