(Additional reporting by Tenisha Sylvester)
A majority of minority shareholders of Scotia Investments Jamaica Limited (SIJL) today voted in favour of a Scheme of Arrangement to allow parent company, Scotia Group Jamaica Limited (Scotia Group), to take SIJL private.
The scheme is now subject to the final order of the Supreme Court of Jamaica.
Prior to the vote, Scotia Group held 77.01 percent of the issued share capital of SIJL. The remaining SIJL shares were held by 2,750 SIJL stockholders, including insurance companies, pension funds and other investors as well as individuals.
Addressing shareholders following the votes at the Jamaica Pegasus in New Kingston; which was simultaneously video-linked for Trinidad and Tobago (TT) shareholders at Hyatt Regency in Port-of-Spain, SIJL Chairman, Jeffrey Hall, said, " I have a certificate provided to me by KPMG, so I'm able to confirm the resolution has been passed by the requisite majorities."
"That is to say, by a majority number of the shareholders who voted in person or by proxy. That majority is 83 percent of the persons present and 99 percent of the shares voted. As such, the resolution has been passed. The next step in the process would be to file the results of the meeting in the court (Supreme Court of Jamaica) and for a second hearing, which is scheduled for September 2017. If the court sanctions the scheme at the hearing, it is expected that the scheme will become effective on that date or by the following business day."
SIJL minority shareholders in TT will therefore be paid the US equivalent of JA $38 per cancelled stock unit while their Jamaican counterparts have the option to receive payment in either Jamaican or US dollars. As of August 11, SIJL stock was trading at JA $35 in Jamaica and TT $2.20.
Reminding minority shareholders why Scotia Group had chosen to make SIJL one of its wholly-owned subsidiaries, Hall said, "Although Scotia Group and subsidiaries are making sure profits and expenses are properly allocated to relevant entities to which they are properly attributed, the fact that there are minority shareholders in SIJL has restricted SIJL from becoming fully integrated; from an operational standpoint, into Scotia Group."
Hall gave the example of "the movement of staff and other resources between SIJL and other Scotia Group entities" having been constrained in ways "that would not apply if SIJL were a wholly-owned by Scotia Group; thus placing a limitation on the ability of SIJL and Scotia Group to optimize their combined efforts."
Jamaica's Supreme Court is likely to vote in favour of the scheme at the next hearing this September. Upon completion of the scheme, SIJL will cease to meet the listing requirements of the Jamaica Stock Exchange and the TT Stock Exchange. It will accordingly, make an application to de-list the SIJL shares from both stock exchanges.
Although the vote went as expected, two shareholders; one from Jamaica and one from TT, were critical of the JA $38 offer, saying that it should have been higher.
An outspoken Jamaican man said, "Nothing wrong with your offer, except determining the market price is not an exact science. I say throw a two dollar on it, round it off at $40 and we'll stay with you. (Otherwise) I say not submitting to $38. We vote no to $38, we want $40."
This view was echoed by Trinidadian shareholder, Haroon Husain, who said, "The price is somewhat low, particularly for shareholders who are from Trinidad."
"If you check the prices, SIJL has reached a high of TT $2.50, it's currently trading at $2.20. If you convert the JA $38 to TT, it comes to about TT $2.00 so I'm not too sure if you had considered the price rate in Trinidad in terms of your valuation. If believe you could have done much better for our 634 shareholders in TT," Husain argued.