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Stock exchange rules Angostura's bid a takeover - Says offer for Lascelles must be restructured
published: Wednesday | December 5, 2007
William McConnell (left), managing director of Lascelles deMercado, and Michael Carballo, executive director of Angostura Holdings Limited, who announced the deal on November 23, were not available for comment last night. - File
The Jamaica Stock Ex-change (JSE) yesterday ruled that Trinidadian Angostura's offer ostensibly for 49.24 per cent of the Lascelles deMercado group was in fact a move for a takeover of the company, demanding such a bid.
"One has to consider the transaction in its totality," the JSE's general manager, Marlene Street-Forrest told Wednesday Business last night. "The company (Angos-tura) would have other agreements with other significant shareholders, which could give them over 90 per cent of (Lascelles). In accordance with our rule they must make a takeover bid."
The stock exchange was not explicit in its concern neither in the Street-Forrest interview last night nor in its formal statement issued earlier in the day.
But market sources said that regulators would have been wary about a proposed inducement agreement in a draft bid document in which the two most powerful figures in Lascelles, its chairman George Ashenheim and CEO William 'Billy' McConnell, were seemingly committed to transfer their more than 46 per cent voting rights in the company to Angostura once it fulfilled the planned terms of its offer in the time specified.
Ashenheim and McConnell hold the shares giving them voting rights in two vehicles, Calla Lilly and Snowdon (2007) Limited, the former of which would be transferred to Angostura, on the face of it, for $2.
Draft bid document
Said the draft bid document seen by Wednesday Business last night:
"In order to induce the offeror to make the bid to the other shareholders in Lascelles, Messrs George Ashenheim and William McConnell, as the holders of all the shares issued by Calla Lilly, respectively, have agreed, pursuant to the bid inducement agreement to transfer to the offeror or its nominee their two shares in Calla Lilly for a consideration of J$1 per share on condition that the offeror fulfils each of the following conditions; namely:
(a) The offeror shall have launched the within bid for all the Lascelles shares (excluding Lascelles shares registered in the name of Calla Lilly and Snow-don (2007 Limited) based on an agreed bid circular at the following price per stock unit/share; namely;
(i) US$10.65 for each ordinary stock unit; and
(ii) US$0.30 for each six per cent preference share; subject to a discount for early payment in accordance with the discount table set out at paragraph 3 (d) above.
( b) the Offeror "Closes" the Bid, no later than January 15, 2008 (unless extended with the written consent of George Ashenheim and William McConnell as the Stockholder' Trustees) and takes up all the Lascelles Shares deposited in response to the Bid and pays the Cash Portion of the Bid Price within 14 days of the Closing date; and
(c) the Offeror Completes the Bid transaction by payment of the Deferred Portion of the Bid Price no later than January 15, 2011."
"On the face of it, that side agreement is problematic," a top market analyst lamented last night. "It is silent on the status of over 9.5 million ordinary shares held by Calla Lilly, which, based on the current offer, would be worth over US$100 million, not J$2."
Neither Ashenheim, McConnell nor senior Angostura officials could be reached last night for a response to the JSE's ruling or an explanation of the agreement that triggered concerns.
Lascelles is a highly profitable conglomerate, whose flagship is the rum manufacturer J Wray & Nephew.
Angostura, similarly, is a premier Trinidadian drinks spirits and drinks and condiments company, whose best-known product is the world famous Angostura Bitters.
The latter's bid for Lascelles has exercised market analysts since its announcement 12 days ago, in part because of how the offer was formulated and the structure of the Jamaican firm.
Lascelles has 96 million ordinary shares, but it requires 1,600 of these shares for a vote. In all, the ordinary shares account for 60,000 votes. Ashenheim and McConnell, through Calla Lilly, control 9,515,980 of those shares, which account for 5,947 votes.
However, the duo lock up their influence over Lascelles through the control of the bulk of the company's 60,000 preference shares — 50,000 15% prefs and 10,000 6% — each of which carry one vote for a total of 60,000 votes. Ashenheim and McConnell control all the 15% preference shares, plus 4,972 of the 6% prefs, held in Snowdown.
In its bid, Angostura, which, on the face of it precluded the equities held by Calla Lilly, said it wanted to buy 86,484,020 ordinary shares (including those it already holds) at US$10.65 a share, for which it would US$4.50 by the end of next January and US$6.15 by mid January 2011.
It also wanted 5,028 of the 6% preference shares, at an offer price of US 30 cents a share, 20 cents being paid up-front and 10 cents deferred until 2011.
However, in both cases it could pay out early, perhaps at a discount price.
"A concern of the stock exchange is that the proposed arrangement is that even if Angostura does not get the the bulk of the ordinary shares that they want, the side deal (for the Calla Lilly stake) can kick in, giving them control of the company," said a source who has apparently studied the document and is also aware of the thinking of the regulators.
"Moreover, Angostura could pay out early and the company could immediately pass into their hands," he added.
Analysts insisted last night that in any revised offer, the stock exchange should ensure that all holders of Lascelles ordinary shares are held on par, including voting rights.
"There also have to be specific information about that Calla Lilly arrangement, too," said one.
In yesterday's statement the stock exchange said that its officials would continue to work with the parties "to ensure that the rights of shareholders and the integrity of the market are protected."
business@gleanerjm.com
published: Wednesday | December 5, 2007
William McConnell (left), managing director of Lascelles deMercado, and Michael Carballo, executive director of Angostura Holdings Limited, who announced the deal on November 23, were not available for comment last night. - File
The Jamaica Stock Ex-change (JSE) yesterday ruled that Trinidadian Angostura's offer ostensibly for 49.24 per cent of the Lascelles deMercado group was in fact a move for a takeover of the company, demanding such a bid.
"One has to consider the transaction in its totality," the JSE's general manager, Marlene Street-Forrest told Wednesday Business last night. "The company (Angos-tura) would have other agreements with other significant shareholders, which could give them over 90 per cent of (Lascelles). In accordance with our rule they must make a takeover bid."
The stock exchange was not explicit in its concern neither in the Street-Forrest interview last night nor in its formal statement issued earlier in the day.
But market sources said that regulators would have been wary about a proposed inducement agreement in a draft bid document in which the two most powerful figures in Lascelles, its chairman George Ashenheim and CEO William 'Billy' McConnell, were seemingly committed to transfer their more than 46 per cent voting rights in the company to Angostura once it fulfilled the planned terms of its offer in the time specified.
Ashenheim and McConnell hold the shares giving them voting rights in two vehicles, Calla Lilly and Snowdon (2007) Limited, the former of which would be transferred to Angostura, on the face of it, for $2.
Draft bid document
Said the draft bid document seen by Wednesday Business last night:
"In order to induce the offeror to make the bid to the other shareholders in Lascelles, Messrs George Ashenheim and William McConnell, as the holders of all the shares issued by Calla Lilly, respectively, have agreed, pursuant to the bid inducement agreement to transfer to the offeror or its nominee their two shares in Calla Lilly for a consideration of J$1 per share on condition that the offeror fulfils each of the following conditions; namely:
(a) The offeror shall have launched the within bid for all the Lascelles shares (excluding Lascelles shares registered in the name of Calla Lilly and Snow-don (2007 Limited) based on an agreed bid circular at the following price per stock unit/share; namely;
(i) US$10.65 for each ordinary stock unit; and
(ii) US$0.30 for each six per cent preference share; subject to a discount for early payment in accordance with the discount table set out at paragraph 3 (d) above.
( b) the Offeror "Closes" the Bid, no later than January 15, 2008 (unless extended with the written consent of George Ashenheim and William McConnell as the Stockholder' Trustees) and takes up all the Lascelles Shares deposited in response to the Bid and pays the Cash Portion of the Bid Price within 14 days of the Closing date; and
(c) the Offeror Completes the Bid transaction by payment of the Deferred Portion of the Bid Price no later than January 15, 2011."
"On the face of it, that side agreement is problematic," a top market analyst lamented last night. "It is silent on the status of over 9.5 million ordinary shares held by Calla Lilly, which, based on the current offer, would be worth over US$100 million, not J$2."
Neither Ashenheim, McConnell nor senior Angostura officials could be reached last night for a response to the JSE's ruling or an explanation of the agreement that triggered concerns.
Lascelles is a highly profitable conglomerate, whose flagship is the rum manufacturer J Wray & Nephew.
Angostura, similarly, is a premier Trinidadian drinks spirits and drinks and condiments company, whose best-known product is the world famous Angostura Bitters.
The latter's bid for Lascelles has exercised market analysts since its announcement 12 days ago, in part because of how the offer was formulated and the structure of the Jamaican firm.
Lascelles has 96 million ordinary shares, but it requires 1,600 of these shares for a vote. In all, the ordinary shares account for 60,000 votes. Ashenheim and McConnell, through Calla Lilly, control 9,515,980 of those shares, which account for 5,947 votes.
However, the duo lock up their influence over Lascelles through the control of the bulk of the company's 60,000 preference shares — 50,000 15% prefs and 10,000 6% — each of which carry one vote for a total of 60,000 votes. Ashenheim and McConnell control all the 15% preference shares, plus 4,972 of the 6% prefs, held in Snowdown.
In its bid, Angostura, which, on the face of it precluded the equities held by Calla Lilly, said it wanted to buy 86,484,020 ordinary shares (including those it already holds) at US$10.65 a share, for which it would US$4.50 by the end of next January and US$6.15 by mid January 2011.
It also wanted 5,028 of the 6% preference shares, at an offer price of US 30 cents a share, 20 cents being paid up-front and 10 cents deferred until 2011.
However, in both cases it could pay out early, perhaps at a discount price.
"A concern of the stock exchange is that the proposed arrangement is that even if Angostura does not get the the bulk of the ordinary shares that they want, the side deal (for the Calla Lilly stake) can kick in, giving them control of the company," said a source who has apparently studied the document and is also aware of the thinking of the regulators.
"Moreover, Angostura could pay out early and the company could immediately pass into their hands," he added.
Analysts insisted last night that in any revised offer, the stock exchange should ensure that all holders of Lascelles ordinary shares are held on par, including voting rights.
"There also have to be specific information about that Calla Lilly arrangement, too," said one.
In yesterday's statement the stock exchange said that its officials would continue to work with the parties "to ensure that the rights of shareholders and the integrity of the market are protected."
business@gleanerjm.com
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