Camilo Thame, Business Reporter

Hayden Singh, managing director of Courts (Jamaica) Limited, will get $8.5 million for his two million shares.

Regal Forest Holdings Limited, a company incorporated in the British Virgin Islands, has announced plans to delist furniture retailer Courts (Jamaica), once its buyout offer of $4.25 per share is consummated.

The company says it already has commitments from 82 per cent of shareholders, and that once it completes the acquisition secured at a price of US$128 million (J$8.3 billion), it would delist, whether or not the remaining 1,800 shareholders take up the offer.

Cobalt Holding Company - a full subsidiary set up by Regal Forest to acquire Courts Plc's 12 Caribbean operations - secured the US$156 million (J$10.2 billion) financing to cover the cost of full acquisition of the Jamaican operations from a consortium of international banks, including Scotiabank, Royal Bank of Trinidad and Tobago and Citibank.

Business as usual

Cobalt is incorporated in St. Lucia. The company said it would be business as usual and that it plans to retain the Courts brand once the takeover is complete.

Having already secured the 79.86 per cent share held by the U.K.-based parent which has been in administration - the British equivalent of bankruptcy proceedings - since the end of November 2004, Cobalt will seek to get the remaining 1,800 shareholders locked into a deal through its takeover offer which opened yesterday.

The offer will run to December 18, during which time shareholders can accept through Mayberry Investment Limited, the lead broker, and Courts Jamaica's registrar, NCB Nominees.

Cobalt has already locked in agreements with seven minority shareholders - including Courts' directors Keith Fredericks whose 10 million shares will earn him $42.5 million, Hayden Singh whose two million shares will give him $8.4 million and Dennis Harris' 1.33 million shares which will give him $5.7 million - to push the offering company past the 80 per cent shareholdings required by the Jamaica Stock Exchange to delist the furniture retailer.

According to Cobalt director Mario Guerrero at a press conference held at the Knutsford Court hotel in New Kingston yesterday, the process would be completed whether or not other shareholders take up the offer.

They have the option of receiving payment in U.S. currency.

"If the other shareholders do not accept, the process will continue," Guerrero said.

In the take-over circular, the Latin American firm noted that 'if a the end of the offer period Cobalt has received acceptances in respect of 90 per cent or more of the stock in Courts then it is Cobalt's intention to procure that delisting will become effective only after the completion of the process of 'Mandatory Acquisition of Minority shares'."

This means that should Cobalt acquire the 90 per cent, it will be able to exercise its rights under the Companies Act of Jamaica to compulsorily acquire the remaining shares including those "who have expressly dissented or have failed to respond to the offer."

If it doesn't receive the 90 per cent or more, then Cobalt intends on delisting "effective shortly after the offer closes."

Cobalt's ultimate parent operates 235 stores across central America, Dominican Republic and the United States as a private entity.

Regal is 70 per cent owned by the Siman family of El Salvador and 30 per cent by Actis, a spin-off funding company of the Commonwealth Development Corporation.

On the pricing of the offer, KPMG's Simon Townsend, acting as financial advisors to Cobalt, told journalists that it represented a premium on all measures including the market price for the share and the book value, with the premium representing a 51 per cent mark-up on the company's book value.

Courts Jamaica shares have been trading at or below $4 since the beginning of February and closed up 15 cents on the exchange at $4 on Tuesday.

Townsend doesn't expect the company to grow significantly as it is 'very mature' with 68 per cent of the local market, and projects less than double digit growth.

- camilo.thame@gleanerjm.com