Scotia projects J$12m savings from delisting preference shares

Marcella Scarlett, Business Reporter

Holders of Scotiabank preference stock have agreed to a proposal from the bank to redeem the 100 million share units five years early at a price of J$1.20 per unit.

The bank expects savings of up to J$12 million per annum by delisting the shares which are publicly traded on the Jamaica Stock Exchange.

Just 228 of 14,000 shareholders of the BNSJ variable prefs showed at Friday's extraordinary general meeting, and just one voted against.

The other 227 yes votes represented 77.4 per cent of the total shares.

The shares were issued in 2007 at J$1 as a bonus to shareholders — one pref unit in BNSJ for every 30 ordinary shares held in the banking group — under a scheme of arrangement for the Scotia companies in Jamaica that created a new group structure. The prefs were originally due to mature in 2016.

These preference shares were listed on the JSE so as to take advantage of tax laws that allow a company listed on the JSE to declare dividends free of income tax.

However, the Provisional Tax Order, which is included as an amendment in the Income Tax Act, no longer provides any special advantages to preference share listings.

Additionally, there were material savings to be realised in listing fees and the like from delisting the prefs.

Costing $10-12 million per year

Scotia Group Jamaica president and CEO Bruce Bowen told Sunday Business that it was costing the bank J$10-12 million per year to maintain the shares.

With the motion passed to delist, it will cost the company a one-off payment of J$120 million.

The results of the meeting will be reported to the Supreme Court of Jamaica and the bank will proceed thereafter to apply for the delisting.

The J$1.20 redemption price places a 6.2 per cent premium on the BNSJ stock, which last traded at J$1.13 per share.

- marcella.scarlett@gleanerjm.com