Mon | Aug 21, 2017

Minority C&WJ shareholders press for Liberty buyout

Published:Wednesday | August 24, 2016 | 8:00 AM
Garry Sinclair, managing director of Cable & Wireless Jamaica.

A group of shareholders has reached out to the Financial Services Commission seeking to force a buyout offer from Liberty Global for their Cable & Wireless Jamaica shares.

The FSC said this week that it has set up a meeting with C&WJ, which operates locally as FLOW Jamaica, as it seeks to determine whether the shareholders' position has merit.

The identities of the shareholders were undisclosed.

Liberty Global acquired Cable & Wireless Communica-tions Plc, the parent company of C&WJ, earlier this year. That deal effectively gave Liberty just under 80 per cent ownership of C&WJ, a company whose stock trades on the Jamaica Stock Exchange.

Stock market rules require that a takeover of more than 50 per cent of any company trading on the exchange should be followed by a mandatory offer to minority owners of the company for their shares at the same price paid for the majority holding.

However, well-placed sources say the thinking inside Liberty Global and C&WJ is that the Jamaican company was not a direct acquisition and, as such, the takeover rules do not apply.

PRELIMINARY STAGE

Asked whether the FSC was requesting that an offer be made to minority owners of the telecom stock, the financial watchdog said no.

"No, no, we have done no such thing," said Senior Director of Securities Laurence Crossley. He then said the issue is at a preliminary stage that is, the opening of discussions with C&WJ.

"We had sent them a letter indicating certain positions and they in turn responded and asked for a meeting so that we can go through some clarifications," Crossley said.

It's not known how the Jamaican asset was priced inside the US$7.4-billion takeover of CWC. Indeed, Jamaica was one of 13 Caribbean markets in which CWC's businesses operated.

The C&WJ stock last traded at $1.04 per share, well off its highs. Its trading range in the past year has spanned 40 cents to $2.

The Liberty-CWC deal was finalised in May.

C&WJ Managing Director Garfield Sinclair said that despite the larger acquisition by Liberty Global, the main shareholder of C&WJ itself was unchanged and, therefore, a minority offer was not required.

"Liberty Global didn't acquire C&WJ shares directly; it acquired its parent company. The owner of the majority of C&WJ shares is still the same, though it is now owned by another entity," he said.

The main vehicle for C&WJ shares is called CWC Cala Holdings Limited, which holds 77.13 per cent of the company.

The Liberty-CWC required the sign-off of regulators in various jurisdictions. Jamaica's Fair Trading Commission said it had no concerns about the deal.

"We have not seen any reason to pursue it as a primary concern, or to ask for additional information from them," said Executive Director David Miller.

The JSE said it had not been approached by the minority C&WJ shareholders, nor was it aware of the push for a mandatory offer, said General Manager Marlene Street Forrest.

As for the FSC, the agency declined to state its view ahead of the meeting with C&WJ.

"When we will have met with them, and we settle on it, then we can give information," said "We do not have a position on it," said Crossley.

The meeting was initially to have happened in the week ending August 19 but was postponed to early September because of scheduling conflicts and the unavailability of lawyers for C&WJ.

"We are contemplating some time in another two weeks or so, because I understand that if people are to be coming from overseas, then it will take a little longer than we expected," Crossley said.

He added that while the meeting was set with C&WJ, Liberty representatives might also participate.

Business reporters Neville Graham and Steven Jackson contributed to this story. neville.graham@gleanerjm.com steven.jackson@gleanerjm.com