Wed | Sep 20, 2017

Mayberry agrees to sell its Scotia Investment shares

Published:Wednesday | July 5, 2017 | 7:00 AM
Senior Vice-president of Investment Banking at Mayberry Investments Limited Tania Waldron-Gooden signs the lockup agreement to sell 9.5 million SIJL shares under its control to Scotia Group Jamaica under a new scheme arrangement for subsidiary Scotia Investments Jamaica Limited to take the company private. Scotia Investments CEO Lissant Mitchell is at right.

Brokerage firm Mayberry Investments Limited agreed to sell its shareholdings in rival Scotia Investments Jamaica Limited, putting Scotia Group Jamaica closer to its goal of taking its subsidiary private.

Mayberry holds roughly 2.24 per cent of Scotia Investments, mainly through Mayberry West Indies Limited.

Under a lockup agreement announced on Monday, Mayberry agreed to vote all its shares in support of the proposed scheme of arrangement of Scotia Investments to be approved by shareholders and the court. Under the scheme, Scotia Group will make an offer for all outstanding shares in minority hands, amounting to 22.99 per cent of the company, at $38 per share. Its target is 100 per cent ownership.

"We're happy that Scotia Group has put a fair and reasonable offer on the table. We are satisfied with the offer price at $38 per share and through our own due diligence, we would consider it acceptable," said Mayberry CEO Gary Peart.

"The reality is that this was a good investment for us, but we welcome the cash returns from this transaction, which we will use to finance other investment opportunities, including the purchase of shares in Scotia Group," he said.

The SIJL stock is currently trading at $37,75, but has sold as high as $42.50 within the past year.

 

Plan to delist

 

Scotia Group Jamaica owns 77 per cent of the Scotia Investments, but needs to own more than 80 per cent of the stock in order to apply for delisting of SIJL shares from the Jamaica Stock Exchange. The SIJL stock also trades on the Trinidad exchange.

Mayberry's acceptance of Scotia Group's offer, which would take its holdings to 79.25 per cent, means it needs less than one per cent more of the shares held by other minority owners some of which are pension funds to hit the trigger for delisting. The process of delisting is not automatic it requires approval by the Jamaica Stock Exchange.

The JSE rules require at least 20 per cent of a stock be held by the public to remain listed, but it also sets a floor of 100 on the number of persons holding the stock.

Shareholders of Scotia Investments in Jamaica will be offered the option to receive the proposed compensation in either Jamaican or US dollars. Independent firm, Ernst & Young Services Limited, was contracted to undertake a fair value determination on the share price offer, and subsequently reported that the $38 per share falls within the fair value range for the shares of Scotia Investments in transactions between willing buyers and sellers acting in their own self-interest.

As of April, the owners with more than one per cent holdings in SIJL were: Scotia Group, 325.9 million shares or 77.01 per cent; Sagicor PIF Equity, 14.44 million units or 3.41 per cent; Mayberry with 9.5 million units, including its managed client account; and National Insurance Fund with 7.02 million units or 1.66 per cent.

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