Pan Jam to dissolve First Jamaica

McPherse Thompson, Assistant Editor - Business

Pan Jamaican Investment Trust, which seven months ago increased its shareholding in its investment and property subsidiary First Jamaica Investments, is now seeking to amalgamate both companies after which First Jamaica will be delisted from the Jamaica Stock Exchange and dissolved.

If the scheme is approved, minority shareholders of First Jamaica, the former First Life Insurance Company, will receive shares in Pan Jamaican Investment at the rate of 10 Pan Jam shares for every 13 First Jamaica stock units.

According to a statement issued to the JSE, the scheme of arrangement will be undertaken pursuant to section 206 of the Companies Act 2004, and if approved by the majority of First Jamaica stockholders and sanctioned by the court, all the ordinary shares of First Jamaica, except two nominee shares, will be cancelled.

In addition, all the assets and liabilities of First Jamaica, including the capital reserves arising from cancellation of the share capital, will be transferred to and vested in Pan Jam.

Upon the cancellation of the First Jamaica stock units and transfer of its assets and liabilities, Pan Jam will issue to the holders of the cancelled First Jamaica stock units, except Pan Jam, 10 ordinary shares for each 13 First Jamaica stock units, subject to further fractional allocation on a pro rata basis rounded upwards to the nearest share.

The share for share ratio of 13 First Jamaica stock units for every 10 newly issued Pan Jam shares is based on a comparative valuation of both companies conducted by Deloitte Touche Tomahatsu and, in addition, is generally in line with the comparative trading price of both stocks on the Stock Exchange.

Pan Jam shares are currently worth J$53; First Jamaica J$38.30. Neither stock traded Tuesday. Wednesday Business calculations show that at those prices, First Jamaica shareholders would have got a more than a six per cent premium under the swap.

According to statement, after the completion of the transfer of assets and liabilities, First Jamaica will be delisted and dissolved without being wound up.

Pan Jam currently owns 83 per cent of the issued ordinary stock units of First Jamaica.

Since 2005, when First Jamaica sold its insurance and banking operations to Sagicor Life Jamaica, it has been operated primarily as an investment holding company similar to Pan Jam. Both companies share common offices and staff and the majority of directors are common to both.

The statement said International Finance Corporation, a subsidiary of the World Bank, is First Jamaica's principal creditor and it has given its written consent to the scheme.

court order

First Jamaica obtained a court order on May 17 to summon a meeting of its stockholders to consider and vote on the scheme.

According to the companies, the amalgamation will produce a strong and focused organisation under one integrated board and will eliminate areas of overlapping costs and produce operational synergies for all shareholders.

"The boards of both companies have been very mindful of the need to balance the interest of all shareholders in both companies and the respective board. Therefore, each appointed a committee of independent directors to oversee the process," said the release.

The companies said they would be sending to shareholders a notice of the meeting to consider the new scheme of arrangements.

mcpherse.thompson@gleanerjm.com