Mar 2008 Financial News

BYE, RBTT Big shareholders vote for Royal Bank of Canada takeover

Mar 27, 2008

It was the ultimate David versus Goliath corporate battle for one of the country's largest commercial banks.

This time, Goliath won.

Although hundreds of emotional RBTT Bank minority shareholders voted against the sale of their bank, the larger stock portfolios of bigger institutional shareholders added up last night, to seal the deal that allows the Royal Bank of Canada (RBC) to buy RBTT in a deal worth US$2.2 billion.

Late last night final vote count results showed that shareholders had voted 98.18 per cent in favour of the sale to RBC.

The vote signals the return to Trinidad and Tobago of RBC-Canada's largest bank-after it left the country 23 years ago, and means an end of the corporate entity known as RBTT Bank, as it will now become part of RBC's assets.

RBC operated in Trinidad and Tobago for 80 years before it left in 1985, which in turn led to the formation of the RBTT Bank.

Majority shareholders, including institutional investors like the National Insurance Board and Guardian Holdings Ltd, led the voting in favour of RBC taking over RBTT Bank at a special shareholders' meeting held at the Hilton Trinidad in St Ann's yesterday.

The NIB owns a 22 per cent of RBTT Bank stock, while Guardian Holdings owns more than 12 per cent of RBTT Bank stock.

Stock of RBTT Financial Holdings (the parent company of RBTT Bank) closed on the local stock market yesterday, at more than $34 per stock unit with about 250,000 shares bought and sold.

RBTT Bank shareholders will get a $40 value for their stock in a cash/RBC share split.

Smaller, individual shareholders, numbering just over 700, crammed the Hilton ballroom and turned what might have been a sombre meeting into an emotionally charged event, as they protested the sale of RBTT Bank to a foreign superbank, but they were ultimately outgunned by the share firepower of larger investors.

Several times during the meeting, individual shareholders criticised larger stockholders and accused them of being liars and thieves.

Approximately 1,400 other shareholders voted by proxy in a process that started as early as 9.30 a.m. yesterday.

RBTT has almost 16,000 shareholders.

Shareholders were greeted by about 40 protestors representing the Federation of Independent Trade Unions (Fitun) at the entrance to the Hilton, while police officers kept watch.

Inside the Hilton, teams of RBTT Bank security officers ensured that only registered stockholders were allowed inside the ballroom for the meeting, led by RBTT Financial Holdings chairman Peter July and including RBTT Group chief executive Suresh Sookoo.

Voting continued as July presented the rationale for the sale of the bank to RBTT, and answered questions from irate shareholders who did not want to willingly surrender their shares in a national bank to what they considered an outside bank, even though they will ultimately receive $40 a share for their stock.

When the transaction is completed in June, shareholders will get $24 in cash per stock unit and $16 in RBC common shares which are traded on the US stock market.

This deal was not sweet enough for the hundreds who filled the ballroom to capacity yesterday.

Fitun president general, David Abdulah, said this was a fight between the big versus the small and ultimately, the smaller votes would not be enough even though there were more individual investors who protested the RBC takeover of RBTT Bank.

He said there remained questions of transparency and issues of patrimony in the deal.

"It is a still a victory for the ordinary people (because they objected to the deal)," he told the Express.

Former stockbroker Winston Padmore, a long-time RBTT Bank shareholder, also opposed the sale and compared it to a debate in Parliament.

He suggested that Government should have stepped in and overseen the transaction, because the sale of RBTT Bank had a part to play in the future development of the country.

Padmore also pointed out that RBC was allowed to take control of RBTT Bank even though Canada does not allow foreign entities to own Canadian banks.

A shareholder said she voted against the sale but resigned herself to having to surrender the RBTT stock, which her mother had bought for her as a first investment and which she promised never to sell.

Another shareholder brought his three young sons to the meeting to show the larger investors who approved the deal that they would be depriving his children.

RBTT stockholder Peter Permell also disapproved of the sale of the bank, but said that some ordinary shareholders were not well informed about the details of the deal and could not effectively comment.

Financial expert and independent senator, Subhas Ramkhelawan, noted that during the meeting, concerns were expressed by shareholders that this was a takeover and not an amalgamation as expressed by RBTT Bank and RBC executives.

He said opposing shareholders believed the vote in favour of RBC acquiring RBTT Bank would mean that the local bank would become a "non-surviving entity", and shareholders felt there were policy implications for the country in deals like this.

"The process is difficult for shareholders to accept but based on our analysis, the pricing was not unreasonable," he said.

After the voting process was completed, counting of ballots led by Aegis Business Solutions commenced at around 1.30 p.m. in a secure room at the Hilton, that not even RBTT Bank senior staff were allowed into.

Four hours later, at around 5.30 p.m., only a preliminary count had been completed and a double check of votes had started.

The count continued until after 7.30 p.m.


Source:
Curtis Rampersad
The Daily Express, Page 3
Thursday, March 27th 2008

http://www.trinidadexpress.com/index.pl/article_news?id=161299186