THE MERGER of the Caribbean operations of furniture giant Courts, is well on the way with a massive stock transfer occurring on the Jamaica Stock Exchange (JSE) last Friday.
In previous reports, it was revealed that Courts is embarking on a restructuring programme that would see the merger of its 95 branches in 11 Caribbean countries under one regional umbrella. Under Courts' plan, an-nounced on January 19, each Caribbean territory would report to one regional entity that would float its shares on all three regional exchanges - the JSE, the Trinidad & Tobago Stock Exchange and the Barbados Stock Exchange.
To further this planned cross-listing, a bloc 1.9 billion shares crossed the JSE at a value of $6.9 billion. On March 12, the share price traded at $3.79.
According to informed sources, the shares were sold by Courts Furnishers (Overseas) Limited, the Jamaican holding company for Courts PLC, the British parent of Courts (Jamaica) Limited.
Managing director of Courts (Ja), Hayden Singh, confirmed this information. He told Wednesday Business that, "We (Courts) have got operations in 11 Caribbean islands and we want to bring them together under one company and put on all three region stock exchanges. Courts bought the shares that were traded, so the beneficial owner remains the same. We have just transferred the shares to a special vehicle for the regional floatation of the shares. However, this is not a merger in its strictest sense, as each company will continue to operate independently. We will only have to report to a regional entity."
Leo Williams, managing director of JMMB Securities said, "The regional merger is good for the stock. Courts is following in the steps of Grace, Kennedy in listing on all three exchanges. The stock will be better valued in the sense that valuations will occur in all three exchanges. And those holding Courts (Ja) stock will find that those shares are more valuable because of this move. Our firm recommended this stock as a buy even more the bloc transaction on Friday. And it is still a buy."
Mr. Williams said, "One thing that I question is the cost of this merger. It will cost, but the trick is to do it in such as way as to keep the cost minimal."
In terms of the final cost of the merger, Mr. Singh states that, "We haven't worked out the final numbers yet, be we know that it won't be terribly expensive. Accountants have to look at the values of each location and things like that."
STRONG PROFITS
At Dehring Bunting and Golding, Mark Walters, vice-president of Treasury & Asset Management said, "The construction industry is doing well, especially housing solutions. Therefore, as the largest furniture retailer, they will benefit from this trend. Courts will continue to earn strong profits and so that will carry up its share price."
In addition to Jamaica, the Courts group has outlets in Trinidad and Tobago, Barbados, Belize, Antigua, St. Lucia, Dominica, Grenada, Guyana, St. Kitts and St. Vincent.
The Barbados operations of Courts is listed on the Barbados exchange. On Friday, the last sale price was BDS$5.20 or J$156.26. The stock is not currently trading on the Trinidad & Tobago Stock Exchange.
Once the merger takes effect, the shares traded on the Barbados and Jamaican stock exchanges would be delisted.
The Caribbean region contributed 28 per cent or US$181 million of the parent's US$637 million net profit for the year ended March 31, 2003.
- Dennise Williams
