Lascelles fights FSC in court

Steven Jackson, Business Reporter

Lascelles deMercado and Company has turned to the courts to compel the Financial Services Commission (FSC) to declare the amended hostile bid by Black Sand Acquisition Group as being non-compliant with the regulator's takeover rules.

The conglomerate's lawyers will argue that position before the Supreme Court starting October 10, a move that could potentially delay the Black Sand bid which is open to October 18.

Lascelles wants the court to instruct the FSC that a revised proposal issued by Black Sand earlier this month is still non-compliant. This, in turn, would require the issuance of a third proposal and consequently delay the release of the Lascelles directors' official response to the offer.

"In the interest of time we will take the FSC to court, but it was not our first choice," Lascelles company secretary Jane George told Wednesday Business in an interview Tuesday. The FSC regulates financial institutions and overseas mergers and takeovers.

"We are going to court on October 10 and the court will hear the arguments of non-compliance," George said.

Lascelles has been challenging the validity of the revised proposal made by Black Sand through an appeals tribunal at the FSC since last week.

Lascelles contends that Black Sand stilllacks proof of funding but the FSC viewed the revised proposal as compliant. The tribunal wrapped up Tuesday with both parties opting to hear arguments in court, according to George.

"The FSC wrote a letter to the FSC tribunal which brought up the point that the tribunal was not the proper place to hear these arguments," said George. Calls to FSC for clarity went unanswered up to press time.

George rejected the view that Lascelles was stalling the release of its official response to Black Sand.

"We already have a directors defence circular drafted," she said. "Lascelles is not trying to delay but we do not feel the offer is properly compliant."

The FSC previously set a September 21 deadline for the release of the directors' circular, according to the FSC notice.

Black Sand previously said it received equity commitments from a group of investors led by United States-based Octavian Special Master Fund LP and Kingston-based Pan-Jamaican Investment Trust. Wednesday Business estimates the offer at some US$370 million (J$31.9 billion), which amounts to roughly half the price paid to acquire Lascelles by the Trinidad-based CL Financial Group three years ago.

Lascelles said last month that the original Black Sand proposal was undervalued, lacked evidence of capital, and could strip the group of its profitable Appleton Rum brand. Consequently, it advised shareholders to hold on to their shares until further notice. Lascelles required Black Sand to submit an amended bid proposal in accordance with what it described as regulatory guidelines. Black Sand responded by clarifying that the 74.26 million Carreras shares held by Lascelles was not put up for sale as claimed, while extending the US$3.86 per share offer deadline initially by a month, from September 19 to October 18.

Black Sand, a group of investors led by former Lascelles managing director William McConnell, has bid for not less than 90 per cent of Lascelles' ordinary shares and 100 per cent of the two preference stocks. Black Sand said it intends to stabilise the operations of Lascelles and its subsidiaries.

The Trinidad government, through the bailed-out CL Financial Group, owns 87 per cent of Lascelles but controls 92 per cent of the voting rights.

steven.jackson@gleanerjm.com