It is now official National Commercial Bank (NCB) will be acquiring nearly 30 percent of Guardian Holdings subject to regulatory approvals, making them the largest shareholder in the Trinidad based company that was previously controlled by Jamaica Mutual Life.
The announcement now confirms the ICInsider.com report earlier in the year of NCB’s strong interest in the insurance group of companies. The move is in keeping with IC Insiders’ earlier understanding that both NCB and Proven Investments were targeting approximately 36 percent of Guardian, with the targets being – Tenetic Limited block of 35.84 million which, amounts to 15.46 percent of the company and Arthur Lok Jack’s direct holding of 6.29 percent or 14.59 million units. Arthur Lok Jack’s is listed as having a beneficial interest in Tenetic. Royal Insurance Trinidad holds 22.33 million units or 9.63 percent and RBC Trust T&T controls 4.99 percent or 11.57 million shares. The release from the Guardian shareholders indicates that IFC, who recently bought into Group, is one of the sellers, with no mention of RBC.
The acquisition of Guardian would be a complete reversal, returning the company to its Jamaican roots. Guardian was once majority owned by Jamaica Mutual Life, who sold out their holdings sometime before they ran into problems in Jamaica and folded. The Jamaican entities consider the company to be clean, well run and considerably undervalued. Guardian last traded in Trinidad at TT$13.90.
Guardian is primarily a Life Insurance company but also owns a general insurance arm. NCB operates the well known OMNI Life Insurance Company. Part of the likely synergy in future would be a merger of general insurance companies that both entities own, with Omni to be sold to the Life Insurance arm, resulting in economies of scale. The possibility exists that an expanded general Insurance company could be listed on the stock exchanges within the Caribbean, thus spreading the risk associated therewith. Guardian’s profit attributable to equity shareholders for the nine months to September was $235 million, down from $286 million for 2014.
Net Income from Insurance Activities grew by $80 million to $533 million from $453 million in 2014, however. Investment activities generated net income of $527 million as against $629 million in 2014, a result significantly affected by the fair value losses of $66 million (2014 gains $27 million) that were occasioned by extreme market uncertainty during the month of September. IC Insider estimates that NCB could see profits rising around 40 cents per share for the 2016 financial year if the deal is finalized soon and on the assumption that the price is around the last traded price of the stock.
Ciboney shares doubled but why?
Ciboney traded 1,186,460 units on Wednesday at 16 cents for a 52 weeks’ high, but the stock closed with the bid at 16 cents to buy 1,813,540 shares as investor push to price up to levels not seen since 2004 when it traded as high as 32 cents. The stock has doubled since November 9 when it traded at 8 cents. On the September 24 there were trading in 4.36 million units and 5.36 on October 26 and 2.1 million units on November 16.
Why the interest in the stock of a company that reported a loss of $1 million for the quarter, ending in August and seems set to lose $4 million for the year ending May 2016? For the 2015 fiscal year, a loss of $5 million was reported and $8.7 million in 2014.
Ciboney has whittled down the funds it holds in cash and investments, to $14.5 million from $20.6 million at August 2014 and with the losses could be out of cash in another two years, unless they were able to sell the land which the company owns. The last valuation was done in January 2015 which gives a value ranging from $200 million to $215 million, but is on the books at $44 million. If the valuation of $207.5 million was fully booked, the net book value would be around 31 cents per share. So far Ciboney has not obtained a buyer prepared to pay a price close to the market value.
IC Insider has been informed that two parties have expressed an interest in acquiring the company in part. One proposal is without the land, with the land to be placed in a separate company to be formed to hold it in proportion to existing share ownership of Ciboney. The other would see FINSAC retaining the land in possible exchange for either a cash injection and or transferring the FINSAC shares to minority shareholders. The deadline for the offer is Friday this week,any agreement would be subject to a vote by shareholders. If the former proposal succeeds, cash inflows would be minimal initially and shareholders would have to wait on the sale of the land for further payment. In the second case, investors would see no cash but the share value could be between 30-40 cents, with the possibility of losses could be eliminated. There is no guarantee that any of the proposals will be accepted. In the meantime, the price of 16 cents is well under the 31 cents adjusted net book value.
Paramount eyeing new stock offering
Junior market listed Paramount Trading will be heading back to the stock market soon to raise additional capital to help fund the US$4-million 50/50 joint venture lubricant manufacturing operation being done jointly with overseas-based Allegheny Petroleum, IC Insider confirmed with Hugh Graham, Chief executive of the company.
At the end of August the company had cash and investments of $165 million well below the cash injection that would be needed for their share of the capital.
“The advisory team is currently working out the capital needs to determine the amount we will go to the market for,” Hugh Graham stated in an interview with IC Insider. Graham stated, “manufacturing the lubricants locally provides higher margins as value added will be better than with imports, will create a better future for the operation and will allow for export of the finished product.”
Graham could not give the start-up date for the venture which is to be housed on property owned by Paramount as they await various approval from governmental departments.
In response to the reason why the company pumped up the dividend to 39 cents to be paid in November from 15.1 cents in 2014, Graham said “the board considered the dividend payment versus the profit realised and felt that investors should get a good return on their investment.” According the Graham, “the payment is $60 million which still left $90 million to add to accumulated profit”
While there might be a lot of truth in that statement, the plan for a rights issue could not have escaped the board with the low price the stock has been trading.
The 2015 payment represents 41 percent of profit and equates to a dividend yield of 14.89 percent based on the price of $2.62 at the start of the year. For the quarter ending August earnings grew 27 percent to 28 cent per share versus 22 cents in the same period in 2014.
Dolphin Cove’s founder rakes in 434% since listing
Stafford Burrowes and his wife
Dolphin Cove has total outstanding shares totaling 392.4 million. Burrowes and persons connected with him will continue to own in excess of 10 per cent of the company.
Eduardo Albor, the chief executive officer of the Dolphin Discovery Group in commenting on the transaction said: “ Burrowes and the Dolphin Cove team have built a world class attraction in Jamaica and I am delighted that he has chosen to partner with the Dolphin Discovery Group to take the venture forward.”
Albor added that the company does not plan to delist the stock from the Stock Exchange but will nevertheless comply with the rule of the Jamaica Stocks Exchange to make a compulsory offer for the minority shares.
Dolphin Cove traded at an all-time high on Wednesday
Stafford Burrowes said: “I am familiar with and have great respect for the operations of Dolphin Discovery in Latin America and the Caribbean, and now in the US and Europe. Dolphin Discovery, like Dolphin Cove, has a very professional approach to the care of dolphins and other species and that encouraged us to do this partnership with them. It gives me great pleasure to know that Dolphin Cove will be part of such a large and successful group of companies. I intend to remain with Dolphin Cove as chairman and look forward to combining my knowledge and expertise with those brought to the table by Dolphin Discovery. I am sure that together we can continue the growth of Dolphin Cove in Jamaica and the Caribbean.”
Burrowes added: ” It is my understanding that as a result of the sale of some of my shares, Dolphin Discovery is required to make a mandatory offer to all shareholders. Regardless of the outcome of the mandatory offer, I intend to remain a significant shareholder of Dolphin Cove and in that capacity I hope to share in the benefits resulting to the Company from its association with the Dolphin Discovery Group.”
Dolphin Cove Jamaica founded 15 years ago by Mr. and Mrs Burrowes in Jamaica offers dolphin attractions across the island and the region.
Dolphin Cove reported a 4 percent increase in profit after tax for the nine months to September, of $412 million over 2014 and a 17 percent increase in the September quarter to $128 million over the similar quarter last year. Cash flow from operations increased by 26 percent to $486 million, compared to $385 million for the similar period to September 2014.
Earnings per stock unit for the nine months amounts to $1.05 and 32.6 cents for the quarter and could end around $1.40 for the year, for the full 2014 year, earnings was $1.12.
Liberty Global strikes C&WC Plc deal
Cable & Wireless HQ
John Malone’s Liberty Global Plc agreed to buy Cable & Wireless Communications Plc in a cash-and-stock transaction valued at 3.5 billion pounds ($5.3 billion). Including the Special Dividend, the transaction values CWC at approximately $8.2 billion, including debt CWC Plc said in a release on the deal. The transaction is expected to complete by the calendar second quarter of 2016.
“The deal represents a multiple of 10.7 times Cable & Wireless Communications’ adjusted annual earnings before interest, depreciation, taxes and amortization, (EBITDA) after taking into consideration cost synergies, according to a statement. Cable & Wireless’ shareholders will get a special 3 pence a share dividend at the deal’s close,” Bloomberg Business reported.
The report did not indicate what is planned with the Jamaican company Cable & Wireless Jamaica with nearly 20 percent minority ownership. IC Insider.com Has earlier suggested that the local operation could be valued around $3 using (EBITDA) measure.
Strong C&WJ mobile growth
Cable & Wireless HQ
The report went on to state, “In the first half of the current fiscal year, our total number of network sites grew by 10 percent and our mobile networks carried 93 percent more data traffic, with Jamaica data traffic up 241 percent, BTC up 137 percent, Panama up 81 percent and Barbados 73 percent higher.”
In the Caribbean, the company said “we completed Phase 1 of our broadband expansion in Jamaica passing 800 homes in Portland with Phase 2 underway and set to pass an additional 7,300 homes taking our total homes passed to 276,000. We also began installation of a new backbone to upgrade core capacity to multiple 100Gbps links. In Trinidad, we passed an additional 4,800 homes with HFC, taking our total homes passed to 311,000 in Trinidad and we passed an additional 19,000 homes with FTTH in Barbados taking our coverage to over 100,000 homes passed. In the Bahamas, we have completed the design phase of our plans to pass 14,200 homes.”
Ambush Marketing be careful
Danielle Stiebel, Associate , Myers, Fletcher & Gordon (MF&G), during her presentation on “Ambush Marketing”.
Ambush Marketing is “a promotional tactic designed to associate a company, product or service with a particular event, or to attract the attention of people attending the event, without payment being made for an official sponsorship”, attorney Danielle Stiebel of Myers Fletcher & Gordon (MF&G) said in delivering a presentation on “Ambush Marketing” at a Wednesday Morning Breakfast Seminar hosted by the Jamaica Chamber of Commerce (JCC) and MF&G recently at the New Kingston Conference Centre.
Stiebel cautioned that marketers while being creative in their campaigns must avoid infringing various event players’ rights. In like manner, she said that in order to safeguard against ambush, sponsors must prepare well drafted sponsorship agreements that adequately protect their rights and provide for sufficient remedies in the event of breach. She also emphasised the need for organisers/promoters to be more vigilant in protecting sponsorship rights through proper protective and enforcement measures.
Earlier this year there was an outcry by Cable & Wireless one of the major sponsors at Boys and Girls alethic championship in Kingston about ambush marketing by one of it’s competitors at the event raising awareness in the topic.
FirstCaribbean leaving Belize
FirstCaribbean Bank, a subsidiary of CIBC Canada, is set to exit banking activities in Belize the Central American country with lots of land and a small population of 332,000.
“The bank entered into an agreement on August 3, to sell its net assets in Belize to a local banking institution, Heritage Bank Limited. At July 31, 2015, assets for the Belize operation totalled US$169 million, while total liabilities were US$140 million”, FirstCaribbean said in a note to their July interim financials. The bank currently operates 5 branches in the country.
Upon the completion of the sale and related wind-up activity the Bank will discontinue its operations in Belize. The transaction is subject to approvals from the Central Banks of Belize and Barbados, along with other related governmental authorities. The transaction is not expected to have a material impact on the Bank’s capital ratios, the FirstCaribbean report stated.
The sale will make a huge difference to the acquiring bank as the acquired assets will more than double its size. Heritage Bank had assets of Belize $244 million 
at the end of 2012 which fell to $204 million at the end of 2013, with deposits falling from $228 million at the end of 2012 to $187 million and cash declining from $110 million to $57 million.
The bank made a profit of $1.76 million in 2013 after tax and $2.2 million in 2012 but had accumulated deficit of $21 million with net equity of $14 million at December 2013. It takes two Belizean dollar to purchase one US dollar.
Heritage has 10 branches in Belize according to information on their website.
31 seats for PNM poll suggests
The voters in the twin island state of Trinidad and Tobago go to the polls on Monday, September 7 in general election to elect a new government with polls showing a possible massive victory for the main opposition party, the PNM. The incumbent, the People’s Party Coalition – United National Congress (PP/UNC) won the last election with 29 out of the 41 seats that makes up the parliament. A recent opinion poll shows the governing party trailing the main opposition party by a large percentage.
If the actual results of the elections are close to what the poll indicates, it would amount to a massive victory for the PNM, with approximately 54 percent to the (PP/UNC) 43 percent of the popular votes. The PNM is likely to garner 31 or 76 percent of the 41 seats up for grabs, IC Insider calculations show. Two of the 31 seats are very marginal and could go either way.
The recent poll was conducted by H.H.B. & Associates was carried out on behalf of Guardian Media Ltd. According to the poll results, the People’s National Movement (PNM) is leading the race in voter support with just eight days to go before the election with 37 per cent of respondents said the PNM, while 30 per cent said the PP/UNC. The undecided respondents accounted for 31 per cent, while two per cent said Independent Liberal Party.
The poll was conducted between August 22 and 28, through the regional corporations in Trinidad. A random sample of 1,000 persons were surveyed.
RJR Gleaner pre-emptive move
TVJ one of RJR’s subsidaries
The statement avoided naming entities but there are only two telecom companies in the island. Digicel started online media start-up LOOP, acquired cable company TELSTAR and regional cable channel SportsMax within the year. While LIME (C&W) regionally acquired Colombus Communications which trades as FLOW locally. Additionally the IC Insider understands from impeccable sources that talks broke down between LIME and an online media entity set for acquisition.
These moves however came within the context of what the media entities described as an already “challenging local climate”, according to an acquisition statement on a dedicated page on the Gleaner’s website.
“Further, recent moves by the large foreign owned telecom players have introduced a new dynamic where they themselves are increasingly offering media services, competing for local advertising dollars with the traditional players. Our two entities have sought to counter these developments by consolidating to shore up our financial bases in preparation for the heightened competition,” according to the statement on the dedicated merger question and answer website.
The developments in media and telecommunications so far this year could put many Jamaican media companies into the red, facing massive cut back in resources and even closure. This transaction is therefore necessary for financial sustainability of the two businesses. Jamaica needs a strong locally-owned media entity to maintain and expand our offerings globally, added the statement.