Pan Jam shareholders vote 'yes' on First Jam merger
Published:Wednesday | June 22, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Shareholders yesterday approved a resolution that effectively allows Pan Jamaican Investment Trust to begin the absorption of subsidiary First Jamaica Investments fully into its operations and create a mega-investment firm.
The final hurdle now involves a similar approval by First Jamaica shareholders at that company's annual general meeting on Thursday.
The absorption would be done via a share swop and will increase total shareholder equity significantly at Pan Jam, from its current J$10.6 billion to include First Jamaica's larger J$13.4 billion.
The size of the capital base of the merged operations was not immediately clear.
"While there will be a dilution of shareholders interest, there is an increase in assets to compensate for that dilution," explained Stephen Facey, Pan Jam president and CEO.
First Jamaica's 303.5 million shares will be delisted, and the company dissolved following the completion of the transfer of assets and liabilities. The purpose of this absorption is to increase efficiency and shareholder value, added Facey.
"Why this investment? Since it sold its banking services to Sagicor, First Jamaica had become much like Pan Jam - a holding company for investments," he said.
"The boards and management team of both companies, they are very much the same. And we believe that this merger would provide a focused organisation with one board, one management team and eliminate overlapping costs and, most importantly, operational synergies that would redound to the benefit of all shareholders," he told Pan Jam's AGM.
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. Pan Jam currently owns 83 per cent of the issued ordinary stock units of First Jamaica.
The share swop proposes that First Jamaica will receive shares in Pan Jam at the rate of 10 Pan Jam shares for every 13 First Jamaica stock units.
Technically, yesterday's approval by shareholders would increase authorised capital in Pan Jam by 50 million to 250 million, which is a calculated amount necessary to facilitate the swop.
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.