NCB Buying 50.1% of Bermudan bank

NCB Financial Group today announced the acquisition of majority shares in the Clarien Group, a Bermudan based financial group in which Portland Private Equity holds 17.92 percent interest.
Edmund Gibbons Ltd with retain 31.98 percent of the shares. The transaction has received approval from Bank of Jamaica and the Bermuda Monetary Authority provided a no objection letter, the release from NCB states but final approval is subject to the Ministry of Finance. James Gibbons a director of the group expresses the view that the linkage will enable expansion of their offering locally and globally.
In 2016, Portland Private Equity pumped in B$$12.6 million into Clarien to meet capital needs based on tighter regulatory capital requirements as well as a swelling bad debt position amounting to 14 percent of their loan portfolio. The bank is said to have made B$$500,000 profit in 2015.
According The Royal Gazette, Clarien said its loan portfolio had shrunk by $66.8 million in 2015 to $809.7 million by the end of the year. This was attributed to a trend of borrowers paying down mortgage debt.
Clarien has more than eight decades of banking history in Bermuda and is said to be the largest bank in the country.
NCB recently raised US$250 million on the local market for regional expansion, this acquisition seems to be one that was on their radar when the funds were being raised, but based on the amount Portland injected the acquisition by NCB could cost around US$40-50 million, a mere dent in the amount they raised in the summer of 2017, but with earnings of $500,000 in 2015, unless profits picked up considerably since, which seems unlikely with the acquisition by NCB, the amount paid is most likely considerably far less.
For the fiscal year to September NCB made profit of J$19.1 billion or US$146 million up from J$14.45 billion in 2016. Gross revenues for 2017 fiscal year amounted to J$75.7 billion.

Lasco Distributors shocker

Lasco Distributors awarded $273 million by the court.

The award for damages and interest granted to Lasco Distributors is a mere US$2 million or J$273,278,243 against Pfizer, Lasco Distributors announced, today.
The company advised that the formal order was signed by Justice Vivene Harris and filed on November 24, 2017. LASD has further advised of the Company’s intent to file an appeal.
The amount awarded for damages and interest up to November 3, 2017, is way below the US$311 million the company claimed plus interest.
At the time of the Initial Public Offering in 2010 the prospectus stated “no provisions have been made in the Company’s accounts for the impact of the outcome of this decision and the accounts contained in this prospectus do not take it into account. It is the expectation of the Company, based on legal advice it has received, that its lost sales of the product to date (estimated to be $400 million) are likely to be recovered in the event that it succeeds in this matter but it is difficult to quantify the amount of damages that could potentially be awarded to the Company as they will continue to accrue until the matter is decided.
The amount awarded which should be profit that would have be lost as a result of the loss of sales may not in reality be far from the profit lost to 2010 but there would be loss of sales thereafter.
Last week, Lasco Distributors advised the Jamaica Stock Exchange that a director sold 2,042,774 shares on November 11, and on November 24 that a directors sold 21,054 shares during the period November 13-14, 2017.

US$22.5m for Berger Caribbean

Ansa Coatings US$22.5 million in cash to acquire the holding company of holding the majority shares in Berger’s operations in Barbados, Jamaica, and Trinidad and Tobago in July 2017.
The amount was stated in the valuation report done by PriceWaterhouseCoopers for the Berger Trinidad. According to the report “ANSA represented to us that a total cash consideration paid for the investment in LBOH, of which US$2.976 million was allocated to the 3,613,011 BPTL ordinary shares (representing a value of TT$5.60 per share at a conversion rate of US$1 = TT$ 6.79). ASNA further represented that the purchase consideration was not derived based on an individual territory/ subsidiary basis but for the Caribbean operations as a whole.”
The payment places the consideration of shares in the Jamaican company, close to the price of  $10.88 that was offered to the Jamaican shareholders.
According to the report the PWC reports state that “we understand that the offeror also obtained a valuation from an independent valuator as at 31 March 2017. This report estimated that the value of 100% of BPTL’s issued share to be within the range of $4.41 to $5.00 per share, with the best estimate being the midpoint of $4.70 per share.”
ACI made an offer to acquire the remaining minority shares at $6.76 per share, the price it paid to Cham Ramlal ltd. for 9.69% of the shareholding a huge premium over the traded price around $4.05. The cost to acquire the remainder of Berger Trinidad will be just over US$720,000.
The Directors recommended that the shareholders accept the offer. In doing so they took account of the fact that ANSA McAL exercises control and direction over approximately 80.86 percent of the issued and outstanding share capital of the Company. Consequently, the remaining shareholders will, in effect, have limited power to challenge any decisions of the offeror and its affiliates. Further, where the offeror, pursuant to the offer, acquires 90 per cent of the offer shares, there are statutory provisions which empower the offeror to acquire the shares of those shareholders who do not accept the offer.
They also considered the fact that the offer was well ahead of the historical price the stock traded at in the past and the poor profit performance in the past with more expected to come as well as the fairness opinion by PWC. All of that was done without trying to frighten shareholders into giving up their shares and is in complete contrast to the recommendations of Jamaican directors, using false information and withholding others pertinent information from the local shareholders, in trying to bully hem into giving away their shares. Warren McDonald a director of Berger Jamaica is one of the directors of the Trinidad company.

CrediScotia buyout to boost LasFin’s profit

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Lasco Financial

Lasco Financial Services doubles its $500 million loan portfolio with the acquisition Scotia Jamaica’s Micro Finance Company Limited which trades as CrediScotia. According to a release from Lasco “the deal was executed on Monday November 13 upon the signing of the share purchase agreement.” 
CrediScotia is a wholly owned subsidiary of Scotia Group Jamaica which entered the Microfinance sector in November 2011 and currently serves its customers from its seven branches islandwide.
Jacinth Hall Tracey, Managing Director of LFSL explains that the move is part of a larger strategic plan for Lasco Financial to continue its focus on expanding its loan portfolio.
“It is a great opportunity for Lasco Financial Services. We have been developing opportunities incrementally to serve our customers who are in need of micro financing, this move immediately gives us the reach and scale as we will immediately double our loan portfolio and number of clients as well as branches across the island. This merger allows us to maximize on the synergies of both companies and will create one formidable company.
CreditScotia will become a wholly owned subsidiary of LASCO Financial Services and will continue to operate independently of the LFSL Group.

Lasco Financial profit jumped sharply for 2017 Q2.

As such, the acquisition will not see any disruption to the business, employees or clients, the release from Lasco stated. That will only be for a while to allow things to settle, eventually, the attractiveness of economies of scale and the savings to be reaped will be too enticing to be ignored.
The consideration was not announced but could be in the region of $500 to $1 billion.
Lasco Financial recently reported profit of that more than doubled in the September quarter, from $44 million to $100 million with the six months results showing profit of $167 million versus $102 million in 2016. The company saw revenues rising to $396 million form $272 million in the second quarter and $715 million for the half year, from $533 million in 2016. While revenues grew rapidly in the period cost were contained well below increases in revenues. For the full year to March 2017, Lasco made net profits of $192 million.
IC forecast was for earnings of 30 cents for this year and 60 cents for the next fiscal year, but this latest move would push earnings higher with 2018/19 enjoying a full year of benefits. At the end of September Lasco had loans and receivables of $1 billion on its books and cash funds amounting to $480 million.
Lasco’s stock closed trading at $4.90 on the Junior Market of the Jamaica Stock Exchange on Tuesday.

67% premium for Berger T&T

Minority shareholders of the Trinidad and Tobago listed Berger Paints are set to get a 67 percent premium on their shares, with Ansa Coatings offer of TT$6.76 for the shares.
The shares were trading at TT$4.05 on the last trading day, prior to the public announcement of the takeover by the Ansa Coatings.
On July 31, Ansa completed the purchase of 500,000 shares from Chan Ramlal Limited being 9.69 percent of the issued shares at the price of offer price. The transactions triggered an obligation by the Group to make a mandatory bid for the remaining shares at the price paid for the Chan Ramlal shares.
According to Ansa, “a consequence of the LBOH Acquisition and the purchase of the Chan Ramlal shares, ACI is the beneficial owner of 3,613,011 Shares and the registered owner of 500,000 Shares amounting in total to 4,113,011 Shares and together with the 60,606 Shares owned by Sissons Paints Limited, ANSA McAL is the deemed beneficial owner of and controls approximately 80.86 percent of the issued share capital of Berger.”
Berger Paints’ Jamaica minority shareholders were offered a negative price to that at which the stock was trading at locally, which was rejected by shareholders, holding 94 percent of the minority shares.

38% more taxes by Jamaican businesses

Increased taxes pushed inflation in April.

Jamaica’ business sector paid 39 percent more taxes to government than projected, for the year to September, with $23 billion collected in corporation taxes resulting from a $6.5 billion increase ahead of forecast.
For the 2017 fiscal year, $16.4 billion was raked in, to September while $52 billion in corporate taxes was paid by the business sector for the full twelve months. Special Consumption taxes on local goods rose 50 percent above forecast with a $5 billion increase while local GCT grew 6 percent or $2.6 billion and travel tax jumped 26 percent or $2 billion above the amounts budgeted earlier in the year. Tax on interest fell $2 billion below forecast to $5 billion and was the only major area of underperformance

Jamaica’s Ministry of Finance newest office building

Revenues for the government of Jamaica continues to outperform forecast with inflows rising $15 billion more than the amount projected, bringing the half year take to $262 billion.
Expenditure underperform projections by $3 billion as interest cost fell $2 billion and the wage bill fell $1 billion.
Government operations ran at a deficit of just $620 million in September, but for the year to date, a surplus of $5 billion. Interestingly, the capital expenditure that have struggled to keep pace with forecast, is down by just $144 million with $18.3 million having been spent. The primary surplus, one of the major target under the IMF agreement, came in at $62 billion or $17 billion better than planned.

Chlorine to boost Paramount’s margin

Paramount Trading is expanding its operations by offering chlorine and bleach products for contract manufacturing and through a joint venture with Allegheny Petroleum into lubricants.
“The Company recently completed construction of the infrastructure required for a new chlorine and bleach plant at its 6 East Bell Road, Kingston, which will be outfitted with state of the art equipment and advanced technology. The Company plans to commence operation of the plant in February 2018,” the release from the company states.
The Company also advises that it entered into an Asset Sale Agreement to acquire the bleach plant equipment and other assets from Seprod, for its new chlorine and bleach operations. This acquisition is in line with the Company’s goals to continuously strengthen its presence as a manufacturer in the chemicals market, and will complement the Company’s existing offerings. Paramount, Chief executive Hugh Graham said is the largest importer of chlorine into the island and that is also exports the product to the Eastern Caribbean.
Currently chlorine is imported in 150 pound containers, with the new facility chlorine will be imported in 2 tons containers which will be used to fill smaller 150 pounds containers, the by-product flowing from the process is bleach, Hugh Graham advised IC The net effect will be improved margins and lower cost. The deal with Seprod will come into effect in February after Seprod exhausts their inventories. This will mean lower cost for Seprod as Paramount packages bleach for Seprod.
The new operation is expected to boost profit at Paramount Trading that enjoyed a 126 percent turn-around in profit for the first quarter to August this year to $34 million from a 31 percent increase in revenues to $331 million. “Yes Alpart was one of our customers in the past when the plant was operating and they have returned now that they have reopened and was a major part of the jump in sales” in the recently concluded quarter, Graham confirmed.
The construction of the blending plant and laboratory, in conjunction with Alllegheny Petroleum is will be completed within a few weeks and is expected to be up and running in early 2018 Graham advised.
Based on discussions we are having the US$5 million that Graham advised was likely two years ago is likely be higher he indicated.
The stock jumped on Monday to $3.59 on the Junior Market of the Jamaica Stock Exchange.

Paramount adds chlorine & bleach

Paramount Trading expanding into Chlorine and bleach processing.

Paramount Trading is expanding its operations by offering chlorine and bleach products for contract manufacturing, the company reported.
“The Company recently completed construction of the infrastructure required for a new chlorine and bleach plant at its 6 East Bell Road, Kingston 11 location, which will be outfitted with state of the art equipment and advanced technology.
The Company plans to commence operation of the plant in February 2018,” the release from the company states.
The Company also advises that on 26 October 2017 it entered into an Asset Sale Agreement to acquire bleach plant equipment and other assets from Seprod, for its new chlorine and bleach operations. This acquisition is in line with the Company’s goals to continuously strengthen its presence as a manufacturer in the chemicals market, and will complement the Company’s existing offerings.
Paramount Trading, enjoyed a big turn-around in profit for the first quarter to August this year, with an increase of 126 percent, to $34 million from a 31 percent increase in revenues to $331 million.
The directors’ report that accompanied the August quarterly results stated that they have “an optimistic outlook for the rest of the year and is very excited by the opportunities that will be realized. The construction of the blending plant and laboratory, in conjunction with Alllegheny Petroleum is slated to be complete during the next quarter.”
The stock currently trades at a PE ratio of 15 with the price at $3 on the Junior Market is in against the line with the market. What is true, is the nimbleness of management to identify new income generated opportunities that makes staying close to the stock potentially profitable.

Lasco damages to be computed

Lasco Distributors who won the case against Pfizer for damages resulting from an injunction preventing Lasco from selling Salts of Las Amlodipine in Jamaica from 2005 until 2014 is awarded J$155,738 for disposal of inventories.  
The major part of the claim, that of loss of profit, is to be computed and presented on the November 24. The court awarded interest to be computed at a rate of 8.23 percent from 2005 to 2017 on the disposal of the inventory at the time the injunction was made.
Medimpex has been awarded US$77,000 to be converted at the rate of J$69.06 to the US dollar, for inventories with interest to be computed. The Judge states that the claims by the two Jamaican firms are too high based on the evidence while the amount suggested by Pfizer was too low. Lasco’s claim was for US$300 million in lost sales plus interest and cost and Medimpex US$15 million.  The award for partial damages was handed down by Justice Viviene Harris today after presentations by Pfizer, Lasco and Medimpex, a third party to the claim.
Lasco who won the case in the Jamaican courts ultimately won the matter after Pfizer appealed the decision to the Privy Council in the UK. Based on the ruling Lasco resumed sale of the product in 2012.
The suit claimed that Pfizer was the registered proprietor of Jamaican Patent No. 3247 granted by the Governor General of Jamaica on the 22nd January, 2002 to Pfizer’s agent, Maurice Robinson for the protection of the invention “Salts of Amlodipine/Amlodipine Besylate. Robinson assigned the Patent to Pfizer on the 22nd March 2000.
The Company began to sell “Las Amlodipine” which contained Salts of Amlodipine in Jamaica in May, 2002. In 2003 Pfizer joined the Company in a suite that Pfizer had commenced in Jamaica in 2002 under action No. P040 of 2002, to protect its rights under the Jamaican Letters Patent and the Company was constrained to cease selling Las Amlodipine by an injunction granted on the 31st March, 2005 in that action. The weight of the defense mounted by the company was that under the provisions of the Patent Act of Jamaica, the Jamaican Patent was not in force when the Company started to market its own product, Las Amlodipine since an earlier patent No. 18266 granted to Pfizer in Egypt had expired on the 30th March 1997.

Lasco Distributors products.

The court in 2009 found that the case for Pfizer for an infringement of Jamaican Patent No. 3247 failed for the reason that it was not valid and subsisting because Letters Patent 19266 for the same substance filed in Egypt in March, 1987 had expired on March, 1997 prior to the grant of Letters Patent 3247 in Jamaica on 22nd January, 2002. For this reason the court gave judgment in favour of the Company.
Lasco had previously committed to pay a portion of the amount to shareholders as dividend but has so far not stated the likely amount.
Lasco Distributors is listed on the Junior Market of the Jamaica Stock Exchange and traded at $8.01 on Thursday and was priced for a big settlement.

More business for Cable & Wireless

Jamaica’s Cable & Wireless seems to be making head ways with continued growth in some segment of the business but saw a small fall in their mobile customer base from June to September.
According to data provided by Liberty Global quarterly report, their Jamaican operations saw fixed lines rose 1,300 to 262,500 in September than at the end of June, internet grew by 5,500 customers to 153,700, Telephony subscribers moved by 10,400 to 206,600 customers but mobile customers fell 3,400 to 930,500.
What has not been mentioned, is that the local company introduced a series of rate increases starting in August 16th as their customers started paying sharp increases for calling to most overseas destinations, with calls to the United States, United Kingdom, China, India and Spain by up to fifty percent. Customers with the FamUltra, Post-Paid plan, will pay up to 50 percent more. Other affected packages will see increases of up to a third of their current charge prior to the increase. Subsequently, the company implemented increases of 6 to 10 percent on some landline services effective October local rates moved from 99 cents to $1.05 6 perform Call to Digicel line moved from $2.40 to $2.55 and other local operators fixed lines USS Canada and UK landlines moved from $10 to $11.
Cable & Wireless rose 4 cents to $1.07 on the Jamaica Stock Exchange on Wednesday.