N&M head on the battle for BS&T:
A long, frustrating process
PORT SPAIN
Petroleumworldtt.com
03 02 08
Now
that Neal & Massy (N&M) Holdings Ltd
has been given the all clear to acquire the much
sought after Bajan conglomerate Barbados Shipping & Trading
Ltd (BS&T), there will be no name change for
the new entity.
“There’s not going to be a name change
again,” said N&M chief executive officer
Bernard Dulal-Whiteway.
“We do not envisage at this point in time
to take into N&M the BS&T name. That decision
was made from the time we went into the takeover.”
He spoke in an interview on Monday at his office
on Park Street, Port-of-Spain.
“Now that it’s been an acquisition—an
acquisition I would say which was hostile to some
extent—it’s been a situation also where
we think we’ve paid a very good price.”
He
also made it clear that N&M has no intention
of subsuming the BS&T brand, which he said
was iconic in Barbados, into the N&M name.
“BS&T is much better known in Barbados,
so that we’d want to make sure the BS&T
Barbados name continues because it’s such
a significant player,” Dulal-Whiteway said.
Among
BS&T’s top brands: Almond Beach
Village, Supercentre, United Insurance.
“It (BS&T) is part of the corporate
DNA of Barbados,” Dulal-Whiteway said.
The
acquisition of BS&T will add several new
business lines to the activities of the N&M
Group: hotels (Almond), beer brewing (Banks Holdings)
and insurance (United Insurance, which contributes
about 40 per cent to BS&T’s profits.)
“There
are some businesses that are similar and one
would hope that by bringing them closer
together in terms of purchasing, logistics, information
technology systems, that we would be able to get
certain synergies going.”
The Pierhead project
Dulal-Whiteway
described the development of about 20 acres of
land on Bridgetown’s south coast
as very exciting and grandiose involving the Barbados
government and the private sector.
It is to include hotels, shopping, entertainment
and a marina.
The former Owen Arthur government had indicated
that it wanted to play a leading role in the project
beyond developing a marina, that involved ownership.
“It may mean they will have to compulsorily
acquire what we own,” Dulal-Whiteway said.
N&M officials have not yet met with Barbados’ new
Prime Minister David Thompson.
Long and frustrating
What
started off as a merger—with N&M
last year having 23 per cent of BS&T shares—turned
into an acquisition.
“We feel that enough information wasn’t
given to shareholders and there were some injunctions
filed, and while that could have been resolved
in our favour, we were then faced with an unsolicited
bid by (ANSA) McAL for BS&T.”
N&M
had no choice but to respond.
“Initially,
what McAL came in with, a bid of Bds$7, was not
good enough for us to accept
because we always had 23 per cent and if McAL had
come with an offer that we found was very attractive,
one of the positions that we could have had was
to withdraw and sell our shares to McAL.
But
McAL came in at Bds$7 and we had to respond and
we responded at a low figure because we were
always of the opinion that what we were trying
to do was to create a merged entity.”
N&M
did not initially want to put cash on the table.
The
offers, counter-offers and issues related to
the legal and regulatory struggle, cost N&M
US$2 million-plus. N&M also lost out on daily
interest earnings on US$110 million it had deposited
with the Barbados National Bank (BNB).
“From
the time we said our offer had closed and had
got the percentage we had, once we had
passed 51 per cent, our offer was unconditionally
accepted by us.
“As
part of it, we had to deposit the funds with
our brokers.
“Money that is tied up in a very short period
of time, you don’t know when you’d
be able to use it. You can’t tell the bank ‘I
want this money on 30-day call or 60-day call.’
“It
must have cost us about US$15,000 to US$16,000
a day in interest.”
BSC removes its cease trade order
Dulal-Whiteway
explained that the people who have BS&T shares will have to get N&M
shares in exchange.
“If you had shares, you had a choice: you
could take up to 50 per cent in cash at Bds$8.50;
the other 50 per cent you get it in N&M shares
at 2.75 BS&T shares for one N&M, plus Bds$1.80
for every BS&T share you have.
“If you are a shareholder with 100 shares,
the you’d get Bds$8.50 for. The other 50,
you divide by 2.75, and you get that number in
N&M shares, and then you’d get Bds$1.80
for every one of that 50.”
Of
the shares N&M bought in Trinidad at $28.37
or Bds$9, Dulal-Whiteway said the Barbados Securities
Commission (BSC) now says it must make that offer
to everyone.
From merger to acquisition
N&M
argues otherwise.
“At
the end of the day, as part of this whole settlement
of everything, what we have agreed
is that when you are doing a transaction like this
and you are exchanging shares and so on, you do
not take the price of the share on the market.
“The Barbadians are saying, well, look,
this value is $48, which is N&M shares divided
by 2.75, whatever that is equal to, and then add
Bds$1.80.”
Dulal-Whiteway said the methodologies used in
the valuation of companies have nothing to do with
market price.
“Market price tends to be influenced by
many things. You tend to use the relative or intrinsic
values,” he said.
N&M
is soon to appoint a valuer, likely to be KPMG
International.
The appointment of a valuer is one of the conditions
of the consent order granted by Justice Elneth
Kentish in the Barbados Supreme Court on February
13.
Most of the local auditing firms have done work
at some point for the conglomerate, hence the possible
selection of KPMG.
“MPMG is fairly independent,” Dulal-Whiteway
said.
What went wrong?
Dulal-Whiteway said one of the first things that
went wrong was the BSC, as regulator, taking legal
action before calling in the relevant parties to
discuss its concerns.
“They just called us, asked what have we
done. We explained what we did and the next thing
we know, there was a court order freezing or stopping
N&M from proceeding.”
He said it was always questionable as to whether
the BSC ever had the power to do what it did.
“They
changed the law, but like many things, there
was a lacuna (gap) in the law, which basically
says they had a conflict.
“The
people who should have been able to do some of
the things the BSC were doing was the
stock exchange and not the Barbados Securities
Commission.
“That
was part of our defence, apart from other things.”
A call to resolve the issue
As
the weeks and months dragged on, N&M chairman
Arthur Lok Jack wrote to the BSC chairman asking
for a chance to resolve the impasse outside of
the courts.
“For
example, the governor of the Central Bank Marion
Williams was of the opinion that the
whole financial market in Barbados was being affected.
She felt Barbados was really becoming the laughing
stock of the situation.
“Therefore,
they asked Sir Henry Forde, a former attorney
general, to try and see whether
he could mediate.”
That was six weeks ago.
First,
though, a court order had to be drafted as well
as a press release and a joint statement
between the BSC and N&M.
Regarding
the latter, the BSC asked N&M to
withdraw its statements that some of the BSC’s
actions were illegal. N&M agreed.
Lessons learnt
The first lesson Dulal-Whiteway learnt from this
experience was the need for countries in the region
to harmonise the rules governing businesses.
“Once
you are talking about capital markets, things
keep changing all the time.”
“You
have to have a very proactive legislative process...
“If you are thinking about wanting to be
a serious player in the capital markets, you can’t
say you want to be a financial centre or attract
financial interests and then have outdated legislation
and have legislation that is conflicting with other
major jurisdictions.”
Story
by Sandra Chouthi from The Trinidad Guardian
-sandy9@ttol.co.tt
The
Trinidad Guardian
Thursday 28th February, 2008
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