Black Sand promises shake-up at Lascelles - Offer opens August 29

McPherse Thompson, Assistant Editor - Business

Black Sand Acquisition Inc will terminate Port-of-Spain appointee Fraser Thornton as the boss of Lascelles deMercado, if its bid is successful.

But the new investors, led by William McConnell, also suggest that Thornton may survive its planned rout of the top management position and board if Black Sand believes it can count on his loyalty.

Black Sand's US$3.86 per share offer opens on August 29 and closes September 19.

In its takeover circular released a week ago, Black Sand said if it acquires control of Lascelles deMercado and Company, it would "immediately pursue a policy of corporate stabilisation and shareholder enrichment."

Such a policy, it said, would likely involve a series of transactions, including the possible sale of a major subsidiary - which it has not identified.

"There can be no assurances that this process will be successful," said the notice to Lascelles shareholders. However, Black Sand "believes it is ultimately in the best interest of the company's shareholders to stem the tide of value destruction and restart the process of value creation."

Direct subsidiaries of Lascelles are: Wray & Nephew group, Globe Limited, Globe Holdings Limited, Lascelles Merchandise Limited, Ajas Limited, John Crook Limited, Transportation Agencies Limited, and Turks Island Importers Limited.

Black Sand also proposes to review the management structure of the Lascelles group in light of the board's strategic direction.

"The current managing director of the company is a nominee of CL Financial and the offeror reserves the right to terminate his engagement if they have good reason to be concerned about his duty of loyalty and fidelity to the Lascelles group under the control of the offeror," Black Sand said.

Several directors of Lascelles are nominees of the T&T government, and, according to Black Sand, should the offer be accepted it intends to reorganise the boards of Lascelles group and the subsidiary companies to stock them with directors nominated by Black Sand.

"This should in no way be regarded as a reflection on the directors concerned, who are all eminently qualified," said Black Sand.

Rather, it reflected the desire of the acquisition company "to secure the independence of Lascelles from the troubled CL Financial Group and to acquire first-hand knowledge of the operations of Lascelles Group and to facilitate a smooth transition."

Lascelles' current board comprise Gerald Yetming, chairman; Fraser Thornton, managing director; Wayne Yip Choy; Stephen R. Castagne; Marlon Holder; Andrew Mitchell; Richard Downer; and Michael Bernard.

It said further that it intends to pursue a policy of sound corporate governance, including the appointment and retention of qualified independent directors.

In addition to McConnell and five other directors already identified - Richard Hurowitz, David McConnell, Stephen Facey, Igor Kuzniar, and Yaov Magen - Black Sand proposes to appoint other persons to strengthen the board "in light of the increased responsibility which the offeror will have as the controlling shareholder of Lascelles", but again this is contingent on the offer being successful.

CL Financial, and by extension the Trinidad government, holds 86.89 per cent of Lascelles ordinary shares and 97.15 per cent of the preference stock, which gives it 92.01 per cent control of the voting rights.

Black Sand has bid for no less than 90 per cent of the ordinary shares and 100 per cent of the two preference stocks.

Black Sand said it was aware that certain Lascelles shares were charged to a collateral agent, RBTT Trust Limited, to secure the obligations of CL Financial and CL Spirits under certain notes and bank loans. It said it reserved the right to purchase any such notes and or bank indebtedness which are secured or intended to be secured by such Lascelles shares or other collateral security documents.

The reference is to the US$240-million bond issued by CL Financial and used to fund its acquisition of Lascelles in 2008.

mcpherse.thompson@gleanerjm.com