Trinidad regulator monitoring NCB takeover bid for Guardian

Amid uproar among minority owners of Guardian stock regarding pricing and a previously undisclosed deal between key shareholders and NCB Financial Group, the Trinidad & Tobago Securities and Exchange Commission (TTSEC) says it is monitoring NCB's bid for a larger stake in the insurance conglomerate.

NCB aims to double its stake in Guardian Holdings Limited from 29.99 per cent to 62 per cent, but has offered a lower price than it paid for its initial investment in the company. Its offer was extended for three weeks to February 2, following a lukewarm response to the bid, but the price was unadjusted.

"The commission is aware of, and is actively monitoring recent developments in the public domain in relation to the subject takeover bid," Arlene Stephen, director of corporate communications, education and information at TTSEC, told the Financial Gleaner via email.

The current offer by NCB Financial, through NCB Global Holdings Limited, is valued at US$174 million, or US$2.35 per share, nearly a dollar below the US$3.24 per share that NCB paid for its initial stake in a deal with key shareholders - including Arthur Lok Jack and Imtiaz Ahamad - that closed in May 2016.

"The commission has not issued a statement in relation to the subject takeover bid and the concerns raised by interested parties, as it is of the view that it would be inappropriate to do so at this time," Stephen said.

TTSEC will issue a future statement on the matter if it deems it necessary, the regulatory authority's spokeswoman added.

At the time of the initial agreement in 2016, the key shareholders of Guardian committed that NCB would make a future takeover bid under the following conditions: if the offer was made up to May 12, 2017, NCB would offer a minimum price of TT$17 per share; up to May 12, 2018, the price would be TT$18 per share; and up to May 12, 2019, the offer would be made at TT$19 per share, as stated in the NCB notice.

However, this agreement was only made public to minority shareholders on January 12, the day the NCB offer was originally set to close.

"This is too blatant. You cannot pay one or two shareholders one price and other minority shareholders another price," said Peter Permell, who described himself as the coordinator of a group of shareholders concerned about the Guardian offer. "That is total madness, and the SEC needs to fix that. It is the highest degree of vulgarity," he said.

ALLEGED BREACHES

The TTSEC says it is cognisant of its powers and functions under the Securities Act, and, in particular, its power to review, approve and regulate takeovers. But while the agency is refusing to signal whether it sees any problems with the current transaction, Permell is insistent that there are clear breaches, that his group wrote to the regulator asserting just that, and is awaiting their response.

"Anyhow you look at it, they have breached the by-laws ," said Permell. "If you take the law and apply to the case, based on their own disclosures, then they are in breach. You cannot enter into an agreement with someone and pay other shareholders at a lesser value," he said.

NCB Financial has not responded to requests for comment on the issue.

On January 12, when NCB extended the bid period, it also disclosed that Lok Jack, Ahamad and their affiliates would be selling the rest of their Guardian holdings, amounting to 21.84 per cent, to the Jamaican banking group under the current offer.

With that stake locked in, NCB would only need 10.17 per cent more to hit the 62 per cent target. Other large Guardian shareholders include RBC Bank with 8.89 per cent and Republic Bank with 3.07 per cent.

The broker for the transaction, Republic Securities Limited, declined last week to disclose the current level of participation in the offer by minority shareholders, saying such information was yet to be made public.

NCB Financial paid J$28 billion for its initial stake in Guardian. The current offer converts to nearly J$22 billion.

business@gleanerjm.com