Mon | Sep 26, 2022

D-Day for Access response to Dolla

Published:Wednesday | August 17, 2022 | 12:10 AM
Kadeen Mairs, CEO of Dolla Financial Services Limited.
Kadeen Mairs, CEO of Dolla Financial Services Limited.
Marcus James, executive chairman of Access Financial Services Limited.
Marcus James, executive chairman of Access Financial Services Limited.
Marcus James, executive chairman of Access Financial Services Limited.
Marcus James, executive chairman of Access Financial Services Limited.
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Dolla Financial Services Limited has formally advised the Jamaica Stock Exchange it was seeking to enter exploratory talks with Access Financial Services regarding a potential takeover bid for its older and substantially larger rival.

Dolla Financial which wrote to Access Financial’s board on August 11 indicating its interest had given Access five days to respond, which expires today, August 17.

On Monday, however, Access advised the market it was not in talks with Dolla, leading the latter company to reaffirm to the stock exchange that its outreach last week was to seek the talks and was still awaiting a response.

“The said letter was a non-binding expression of interest to enter into preliminary discussions to explore the takeover of Access,” Dolla said in a release posted on the market on Tuesday, which also reaffirmed its intent to strike a deal.

“We await a response from Access in order to proceed with confidential due diligence and thereafter, if satisfactory, present a formal offer to acquire Access,” said Dolla’s Company Secretary Jordan Chin in the statement.

Both companies are listed on the junior market of the exchange.

Dolla, which has been operational for eight years, is now controlled by First Rock, an aggressive investment group that entered the market just over two years ago in early 2020. First Rock recently took Dolla public and listed it on the JSE junior market on June 14.

Dolla’s shares dipped by more than six per cent on Tuesday to $3.04 per share on the expectation that Access would resist its takeover efforts. It sliced Dolla’s market value to $7.6 billion.

Access Financial, which was founded in 1995 by Marcus James and has traded on the market since late 2009, also saw its shares fall by more than five per cent on Tuesday to $7.3 billion or $26.67 per share.

The shares of both microlenders, however, are still trading higher than last Thursday when Dolla first approached Access.

As one of Jamaica’s largest microlenders, Access’ loan book is currently valued at more than $4.6 billion, which is more than five times the size of Dolla’s portfolio. In terms of total assets, Access has $5.8 billion on its balance sheet, while Dolla’s assets amount to a fifth of that at $1.2 billion.

Sources say Dolla is weighing what other options to pursue towards its goal of a takeover were Access Financial to reject its outreach for friendly talks, including the possibility of approaching large shareholders, individually.

The largest holders of Access Financial shares include: Springhill Holdings Limited, a company controlled by founder Marcus James and which holds 47.33 per cent direct interest in Access; Proven Investments, 24.72 per cent; NCB Capital Markets, 8.26 per cent, NCB Insurance Agency, 3.84 per cent; and QWI Investments, 3.09 per cent.

None of the five would comment on the matter.

Marcus James is currently locked in a divorce battle with his attorney wife Julie Thompson-James, which sources also say could present a complication for Access’ founder in the event of a hostile takeover attempt.

Thompson-James filed an affidavit for a freezing order against James’ assets in the Supreme Court of Jamaica’s civil division on February 24. The hearing was held via videoconference with Justice Chester Stamp as the presiding judge. Hylton Powell was listed as the firm representing the applicant seeking the freezing order.

Thompson-James is seeking 50 per cent of James assets.

She told the Financial Gleaner that while she can confirm the filing of the affidavit, she cannot comment any further since the proceedings have a gag order on them.

neville.graham@gleanerjm.com