Show me the money
Published:Friday | September 23, 2011 | 12:00 AM
- Lascelles appeals to FSC as battle continues
Steven Jackson, Business Reporter
Spirits conglomerate Lascelles deMercado and Company (LdM) yesterday filed an appeal with the Financial Services Commission (FSC), arguing that its hostile takeover bidder Black Sand Acquisition still lacked proof of funding.
Preliminary arguments were taken when the parties gathered an an undisclosed location at the end of which the FSC, which regulates financial institutions and transactions, adjourned the tribunal until next Tuesday.
Last week, the FSC, in a notice, said the body, having received and reviewed the original takeover bid circular issued in early August, directed that Black Sand rectify it to to address the regulator's concerns.
The FSC said it was now satisfied that the circular has been amended to its satisfaction, and directed that Lascelles issue a directors' circular recommending to shareholders the rejection or acceptance of the offer, pursuant to regulations under the Securities (Takeovers and Mergers) Regulations.
The due date for the directors' circular was set for Wednesday, September 21, according to the FSC notice.
However, Jane George, Lascelles deMercado's company secretary, told the Financial Gleaner: "We contend that the amended circular continues to be non-compliant."
The major problem relates to whether Black Sand actually has secured funding and Lascelles wants proof from the takeover bidder's financier.
"You can't take that to the bank," said George about the revised circular. "One method to demonstrate funding would be for [its financiers] to publish a letter committing to irrevocably lend them the money," she said.
Black Sand previously said it received equity commitments from a group of investors led by United States-based Octavian Special Master Fund, L.P. and locally-based Pan-Jamaica Investment Trust. The Financial Gleaner estimates the offer at some US$370 million (J$31.9 billion) which amounts to roughly half the price paid to acquire Lascelles by the Trinidad-based CL Financial Group three years ago.
The appeal effectively seeks to delay the release of Lascelles' directors circular, a document officially responding to the take-over bid. Last week, Lascelles required Black Sand to submit an amended bid proposal in accordance with what it described as regulatory guidelines.
Black Sand responded by clarifying that the 74.26 million Carreras shares held by Lascelles was not put up for sale as claimed, while extending the US$3.86 per share offer deadline initially by a month, from September 19 to October 18.
Undervalued proposal
Last month, Lascelles deMercado stated that Black Sand's original proposal was undervalued, lacked evidence of the capital, and could strip the group of its profitable Appleton Rum brand.
Consequently, it advised shareholders to hold on to their shares until further notice.
Black Sand, a group of investors led by former Lascelles managing director William McConnell, has bid for not less than 90 per cent of Lascelles' ordinary shares and 100 per cent of the two preference stocks. Black Sand said it intends to stabilise the operations of Lascelles and its subsidiaries.
Lascelles was acquired by CL Financial in July 2008, but the T&T parent fell into a financial tail-spin shortly thereafter. In July 2009, the T&T government assumed control of Lawrence Duprey's CL Financial under a rescue plan launched by the Central Bank. 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 in 2008.
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.