Home' Trinidad and Tobago Guardian : December 1st 2016 Contents DECEMBER 1 • 2016 guardian.co.tt BUSINESS GUARDIAN
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Is Guardian Holdings in play?
For the uninitiated, the phrase "in
play" is a term of art common-
ly used by securities industry
practitioners to describe a com-
pany that has become a potential
takeover target by virtue of an
offer having been made or is in the process
of being made to its shareholders.
Students of the market would recall on No-
vember 30, 2015, exactly one year ago, National
Commercial Bank of Jamaica (NCBJ) entered
into an agreement with the Lok Jack family,
the Ahamad family and the International Fi-
nance Corporation to purchase a 29.99 per
cent interest in Guardian Holdings Ltd (GHL).
In May 2016, the acquisition was completed
with the GHL shares being acquired by NCB
Financial Group Ltd (NCBFGL), a nominee and
affiliate of NCBJ, at a total purchase price of
J$28 billion or circa US$220 million. However,
questions were raised subsequently---in light of
a July 31, Jamaica Gleaner story headlined: NCB
does not legally own Guardian stake---records
show Lee-Chin's AIC owns company. As to
who really owns the GHL stake and whether
the public may have been misled.
According to the article: "checks of local
(Jamaica) companies' records indicate that
NCBFGL was only registered in April, with just
one shareholder, AIC (Barbados) Ltd which is
controlled by Michael Lee-Chin."
Further checks on the TTSEC's website re-
vealed that GHL was formally notified in July
2016 that Mr Lee-Chin became a substantial
shareholder of GHL.
NCBJ was therefore forced to issue a press
release explaining that "at the time the agree-
ment was signed, the structure of the transac-
tion was not yet decided. However, the agree-
ment always contemplated that NCBJ might
appoint a nominee to purchase the GHL shares.
In April 2016, NCBFGL was incorporated with
a view to that company eventually becoming
the financial holding company for NCBJ and
its subsidiaries, as well as future acquisitions."
NCBJ further explained that a request for
Bank of Jamaica (BOJ) approval was made and
they were "awaiting that approval before pro-
ceeding with the next steps in the process."
While all this was happening, NCBJ, in a July
2016 TTSE filing, announced Danielle Camer-
on Duncan was engaged on a six-month con-
sulting contract and that her functions involve
"important deliverables associated with the
implementation of key strategic initiatives."
A quick google search reveals Ms Duncan is
the managing partner of Sage Global Finance
LLC, a Florida-based international commercial
finance company, which focuses on financing:
accounts receivables, business acquisitions
etc. And incidentally, her six-month stint
concludes this month.
On August 12, GHL issued a press release to
advise of the appointment of NCBJ directors
Michael Lee-Chin, Patrick Hylton and Dennis
Cohen to GHL's Board with effect from Au-
gust 4, 2016 to replace GHL directors Marianne
Loner, Douglas Camacho and Selby Wilson.
Now fast-forward to October 2016, NCBJ, in
a Jamaica Stock Exchange (JSE) filing, advised
that the Bank of Jamaica has indicated it has
no objection to the proposal for NCBFGL to
become the non-operating financial holding
company for NCBJ and its subsidiaries; and
as such they would be "proceeding with the
In fact, just last week, in another JSE fil-
ing, NCBJ advised the bank has successfully
completed a securitisation transaction which
closed on November 21, and generated financ-
ing of US$150 million, via the issuance of notes
backed by future flows derived from interna-
tional merchant voucher receivables.
It is noteworthy, in May 2015 NCBJ also an-
nounced a similar transaction just prior to the
initial 29.99 per cent GHL share acquisition,
the only difference is on that occasion the
amount raised was US$250 million.
Both transactions were done via NCBJ's Cay-
man Islands-based special purpose vehicle,
Jamaica Merchant Voucher Receivables Ltd and
placed on the international private placement
market by their arranger, Westwood Capital
It is also noteworthy that when questioned
in August 2016 by the Business Guardian about
the rationale for taking a position just below
the mandatory takeover limit, NCBJ chairman,
Michael Lee Chin said "We loved what we saw
in GHL so much that we decided we wanted
to bump our position up to the limit before we
triggered a takeover bid."
However, when questioned further on
NCBJ's intentions to acquire the remaining
outstanding shares, he said "we are not pre-
pared to go beyond our stake in the company
at this time."
Interestingly, although the Lok Jack and
Ahamad families sold a significant portion
of their shares in GHL, they continue to hold
collectively 50.6 million shares (valued at circa
US$96 million as at last Monday's share price
of $12.90) or 21.8 per cent of the company, or
put another way, just enough shares to guar-
antee NCBJ at least a 51 per cent controlling
Another important point to note is that the
remaining 21.8 percent stake is not held directly
by the Lok Jack and Ahamad families, but by
local private companies wholly owned by them.
What this means is that these shares do not
have to be sold on the TTSE but can be sold
indirectly to NCBJ at any time via the sale of
these companies. GHL and NCBJ would then
just simply have to inform the TTSE within five
days thereafter in accordance with Rule 603.
Finally, PwC (Jamaica), in their audit opin-
ion published on the JSE website on Monday,
having identified the consolidation of NCBGL
as a "key audit matter," disclosed that "in de-
termining the accounting treatment for GHL
in the financial statements of the Group, man-
agement considered the existence of an option
to acquire an additional shareholding in GHL
which would give control."
However, "the activities required to exercise
the option, including obtaining the requisite
regulatory approval, did not create a substan-
tive right to control... and consequently, eq-
uity accounting was used to account for the
This further implies that it is not a question
of if, but when will the remaining 21.8 per cent
GHL stake (owned by the Lok Jack and Ahamad
families) be acquired by NCBJ.
The preceding therefore begs the question
somewhat rhetorically: is GHL in play or are
shareholders expected to believe the above se-
quence of events is merely an uncanny align-
ment of coincidences?
As always, I'll leave the more discerning
among us to do the math.
Peter Permell is a minority shareholder advocate,
who can be contacted at firstname.lastname@example.org
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