First Jam-Pan Jam merger gets unanimous approval

Consulting attorney Trevor Patterson revealed a July timeline for the absorption and eventual delisting of First Jamaica Investment into its parent company Pan Jamaican Investment Trust in the wake of a successful vote approving the plan.

Shareholders voted unanimously in favour last Thursday at an extraordinary meeting at the Terra Nova All Suite Hotel in St Andrew, two days after Pan Jam stockholders approved the proposal. Both companies are controlled by the Facey family.

Patterson, a partner at Patterson Mair Hamilton, told First Jamaica shareholders that papers reflecting the approval would be sent to the Supreme Court this week.

"From past experience, I expect to get a hearing by two weeks after Friday, so sometime by mid-July I expect the process to be completed," he said at the EGM on Thursday.

The approved 'Scheme of Amalgamation' would eliminate overlap at the companies which have similar operations, management and directors.

"We are pleased to advise that there was unanimous approval," said Stephen Facey, chief executive officer at both First Jamaica and Pan Jam, while announcing the preliminary tally. "So the total shares voted were 286.5 million shares, all in favour and none against."

The tally total comprised of 19 shareholders voting in person representing more than eight million units, and 66 shareholders who voted by proxy, representing 278 million shares.

Ralph Chen, an outspoken minority investor who attends most listed company meetings, indicated his support for the absorption of the company into its parent.

"This will give me one less meeting to attend," he told directors during time allotted for investor comments. "This deal makes a lot of sense and it makes the administration process a lot simpler."

Chen was one of two investors who spoke about the amalgamation at the meeting attended by nearly 30 persons.

The accompanying First Jamaica EGM booklet stated that the "cost of the transaction is anticipated at J$20 million", amid legal and consultant fees and stamp duty. Facey said he expects "payback in less than two years". The amalgamation will not result in job losses, the company said.

The amalgamation will be done via a share swap 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 still not immediately clear.

The booklet stated that a share swap method would save on amalgamation costs. "It allows for a tax-efficient transfer of assets and liabilities from one company to another."

First Jamaica's 303.5 million shares will be delisted and the company dissolved, following the completion of the transfer of assets and liabilities.

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 swap 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.

steven.jackson@gleanerjm.com