Barbara Gayle, Staff Reporter
THREE minority shareholders in the reconstructed life insurance giant, Life of Jamaica (LoJ), have obtained a Supreme Court order to challenge the Government's waiver granting the company an exemption from making a mandatory offer to its minority shareholders, thus enabling it to make substantial capital savings.
They are ICWI Investments Ltd., Patrick Rousseau and Ivor Campbell, holders of ordinary shares in LoJ. They have filed a motion in the Supreme Court against the Financial Services Commission (FSC) and are seeking an order to quash the FSC's decision in November 2001, granting the waiver.
On February 11, Justice Neville Clarke after hearing submissions in chambers from attorneys Stephen Shelton and Dave Garcia, of the law firm Myers Fletcher and Gordon, granted the three minority shareholders leave to apply to the Full Court for an order to quash FSC's decision.
The applicants are seeking to quash the FSC's decision, made in November last year, granting a waiver exempting the purchaser of shares in LoJ from making a mandatory offer pursuant to the Securities (Take-Overs and Mergers) Regulations) 1999, to minority shareholders of LoJ.
In December last year, a consortium consisting of Barbados Mutual Life Assurance Society and Life of Barbados bought FINSAC's 76 per cent shareholding in LoJ for US$41.2 million (J$1.95 billion).
The applicants are contending in the motion they filed in the Supreme Court that they are holders of ordinary shares in LoJ, which shares carry voting rights. They each held ordinary shares in LoJ since the year 2000 or before. On or about October 3, 2000, the Financial Sector Adjustment Company (FINSAC) applied to the Jamaica Stock Exchange (JSE) for confirmation that a transaction, in which FINSAC would increase its shareholding in LoJ from 26.5 per cent of the ordinary shares to 76 per cent of the ordinary shares, would qualify as a rescue operation, and that the shares of LoJ would not be delisted.
The applicants have outlined in the summons that on or about November 6, 2000 pursuant to an agreement of that date made between LoJ, FINSAC and ICWI Investments Ltd., FINSAC undertook to acquire 1.115 million shares at J$0.10 each in LoJ. The said shares were issued to FINSAC on or about March 22, 2001, and as a consequence FINSAC owned 1,268,748,955 J$0.10 ordinary shares in LoJ. The shares carried more than 50 per cent of the voting rights in LoJ. On or about May 2, 2001, FINSAC transferred to the Accountant-General of Jamaica the said ordinary shares in LoJ and as a consequence the Accountant-General held shares carrying more than 50 per cent of the voting rights in LoJ.
The Securities Commission, pursuant to Regulation 26(2) of the Securities (Take-Overs and Mergers) Regulations 1999 (as amended), on or about May 16, 2001, advised FINSAC that the Commission had exempted the Accountant-General from the requirement under Regulation 26(1) that a mandatory offer to purchase shares be made to other shareholders of the same class. "This class of shareholders included, and still included the applicants," they contend.
They claim also that a waiver under the JSE Rules, similar to the exemption under the Securities Regulations, was granted by the JSE which, on or about May 11, 2001, advised FINSAC that the transfer of shares to the Accountant-General did not impact the JSE's take-over rules. Therefore, there was no requirement for a mandatory offer. According to the applicants, at all material times since FINSAC's commitment to perform its obligations under the agreement dated November 6, 2000 between LoJ, FINSAC and ICWI Investments, there has been no representation that LoJ has been other than solvent and able to carry on its business as a going concern as evidenced by the 2000 annual report, including the financial statements for the year ending December 31, 2000.
The applicants have referred to the financial statements, which indicate in the company's balance sheet and the group balance sheet that the surplus assets over liabilities was $184.7 million.
