Camilio Thames, Business Reporter

A courts store in Liguanea, Kingston. - File

Regal Forest Hold-ings, the Latin Ameri-can firm that is purchasing Courts Jam-aica, on Tuesday locked up the remaining eight per cent of shares it needed to initiate proceedings to grab up all the shares, should the remaining shareholders, who combined hold less than a 10 per cent stake, not take up the buyout offer.

A reliable source confirmed on Wednesday that Cobalt Holding Company - a full subsidiary set up by Regal Forest to acquire Courts Plc's 12 Caribbean operations - had passed the 90 per cent mark two weeks after opening the offer.

On November 21, when the offer to buyout shareholders at $4.25 a share, or US$156 million (J$10.2 billion) for 100 per cent of the shares was opened, the company told shareholders that it already had commitments for 82 per cent of stocks, secured at a price of US$128 million (J$8.3 billion), but it would delist, whether or not the remaining 1,800 shareholders take up the offer.

Delisted

Even then, the firm could have delisted under stock exchange rules if no other shareholders had taken up the offer, having already secured the 79.86 per cent stake held by the U.K.-based parent which has been in administration - the British equivalent of bankruptcy proceedings - since the end of November 2004, and having locked in agreements with seven minority shareholders for another 2.1 per cent.

The agreements included 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.

But, having received more than 90 per cent means that Cobalt can exercise its right 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," which runs to December 18.

Offer period

After which FRH will delist the firm from the local stock exchange.

Shareholders who accept within the offer period will get paid within days of the closing date, but persons who do not take up the offer within the time, may not get paid during the mandatory acquisition of minority shares, as it is called, until after April or May.

According to the source, shareholders that have already accepted and took up the offer because it was priced well.

Two weeks ago, at the launch of the offer, KPMG's Simon Town-send, 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 traded at or below $4 since the beginning of February and closed up 15 cents on the exchange at $4 on the day of the offer.

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

camilo.thame@gleanerjm.com