From
Boardroom to Courtroom?
Port Spain
Petroleumworldtt.com
11 04 07
The
odds are increasingly likely that the bidding
war for Barbados Shipping and Trading (BS&T)
will move from the Boardroom to the Courtroom.
Neal
and Massy withdrew their offer (of Bds$8.50)
and offered its shareholding (29.1 per cent)
of
BS&T to ANSA McAl at their Offer price of Bds$10.00
per share. Of course, ANSA promptly withdrew their
Offer. The primary reason given by ANSA concerns
an alleged bid by BS&T for the "acquisition
of a significant business in the Caribbean".
The notice further stated that ANSA was "unable
to confirm the extent of financial obligations
intended to be assumed by BS&T". In ANSA's
release, it was stated that they became "recently
aware" of this bid.
This
did not seem to be the case upon the release
of a shareholder Circular by the Board of BS&T
last week. The Board pointed out that information
surrounding the possible acquisition was communicated
to both suitors in addition to the fact that BS&T "did
not intend to undertake any financial obligations
with take-over bids in existence". Moreover,
the release also stated that both the respective
CEO's of ANSA and NML were informed as well.
The Courts will decide whose version is closer
to reality; but this brings up a whole new issue.
The issue is that of shareholder confidence.
ANSA's
withdrawal, while within the terms of their Offer
Document, raises the question of intent.
Was the Company bidding for controlling interest
in BS&T? Or was the Offer merely an attempt
to thwart its rival Neal and Massy? Either way,
going forward, ANSA may be viewed with some measure
of caution by investors, particularly on the part
of BS&T shareholders. A report carried by the
Barbados Nation gave another reason for ANSA's
withdrawal "because of the hostility of the
BS&T Board".
In
retrospect, it was unfortunate that shareholders
themselves were not given the opportunity to vote
by the BS&T Board on which Offer, if any, they
were partial toward. Ironically, two Barbadian
shareholders of BS&T were granted an injunction
preventing such a Meeting from taking place.
The
events leading up to and culminating last week-end
must certainly leave a bad taste in the
mouth for investors in the regional Stock Exchanges.
In the initial stages of the attempted take-over,
shares of BS&T were trading at Bds$5.35 on
the Barbados Stock Exchange; last week, the price
was quoted at Bds$8.80. ANSA's Offer ended at Bds$10.00
per share prior to its withdrawal. So another question
of valuation is raised here. If both suitors were
willing to pay premiums over the book value for
BS&T, what other measures of value were being
considered?
The regional investor is faced with this question
with the impending take-over of RBTT Financial
by Royal Bank of Canada (RBC). Apart from determining
whether the TT$40.00 per share is a fair price,
shareholders only receive sixty per cent of the
cash up front. The balance is to be used to purchase
RBC shares upon consummation of the deal some time
in mid 2008.
I imagine some investors would not be pleased
with the prospect of their money in limbo for six
to eight months. Added to this is the continued
strength of the Canadian dollar against its US
counterpart.
Let
us assume that BS&T and RBTT become swallowed
up by larger rivals. The Regional Exchanges will
have these shares removed from trading, thereby
causing significant erosion of market value. It
is true that we have a proposal by RBC to have
their shares listed similar to Depository Receipts
(DR's), however it is unclear how this arrangement
is to work out.
The
market will be shrunk in terms of choices for
investors as market conditions are not attractive
for new company listings and have been so for some
time. Can we afford to have companies as valuable
as BS&T and RBTT delisted?
The simple answer is no.
Story
by Edgar "Max" Pariagh Equity Trader
Trinidad
Express
Wednesday, October 31st 2007
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