McConnell's Black Sand makes move for Lascelles deMercado

Pan-Jamaican Investment Trust has been identified among a group of investors from which equity commitments have been received for a takeover of Lascelles deMercado starting today, three years after a majority stake was sold to Trinidad and Tobago's CL Financial group.

The takeover will, however, be led by Black Sand Acquisition Inc, a company registered in St Lucia and chaired by William McConnell, the former managing director of Lascelles, who retired at the end of June this year.

Pan Caribbean Financial Services will be the principal broker for the take-over bid.

Outlining the rationale for the takeover, Pan Caribbean, in a release yesterday, said Lascelles is controlled by CL Spirits Limited, a subsidiary of the CL Financial group, a financially distressed conglomerate currently under management of the Trinidad and Tobago government and its Central Bank.

On July 24, it said, CL Spirits defaulted on US$342 million of notes issued in Trinidad and Tobago and Jamaica and secured by a pledge of CL's shares in Lascelles deMercado.

'Lascelles in jeopardy'

The Black Sand board said, among other things, that it was their belief that the future of Lascelles "is now in serious jeopardy and with it, the financial well-being of all of the company's shareholders and, by extension, the CL Spirit noteholders."

Black Sand is seeking to acquire not less than 90 per cent of the ordinary shares and all of the six per cent and 15 per cent preference shares of Lascelles deMercado.

An offer price of US$3.86, representing 9.4 per cent above the last closing price, will be made for each of the ordinary shares. Pan Caribbean pointed out that "the offer takes account of the fact that the stock price has not yet been fully adjusted from the impact of a recent special dividend of US$29 million" declared by Lascelles and payable last Wednesday, July 27.

Black Sand is offering US$0.29 and US$0.23, respectively, for the six per cent and 15 per cent cumulative preference shares.

The offer will be formally launched today and, unless extended, will close on September 19, this year, subject to extension in accordance with the rules of the Jamaica Stock Exchange and the Securities (Take-overs and Mergers) Regulations, 1999.

Commitment received

Pan Caribbean said Black Sand, an international business company, has received equity commitments from a group of sophisticated investors led by Octavian Special Master Fund, L.P. and Pan-Jamaica Investment Trust.

CL Spirits, a wholly owned subsidiary of CL Financial, was the vehicle used to acquire almost 87 per cent of the ordinary stock units, priced at US$9.25, and just over 97 per cent of the preference shares of Lascelles, effective July 28, 2008.

A year later, in July 2009, the Trinidad and Tobago government assumed control of Lawrence Duprey's CL Financial under a rescue plan launched by the Central Bank.

Black Sand said it intends to stabilise the operations of Lascelles and its subsidiaries. In its consolidated unaudited results for the second quarter ended March 2011, Lascelles, among whose flagship is the rum producer J. Wray and Nephew, reported a $296 million rise in net profit to $1.54 billion, a 19 per cent increase over the corresponding period last year.