Appleton Estate, St. Elizabeth, part of the holdings of the Lascelles deMercado Group. - File

Calla Lilly holdings valued in Angostura US$10.65/share offer, says Lascelles

Insisting there is no hidden agenda or secret deal for personal gain, Billy McConnell and George Ashenheim say they fully intended to transfer Calla Lilly to Angostura Limited for J$2.

Calla Lilly is the vehicle used by the McConnell and Ashenheim to hold over 9.5 million ordinary shares in Lascelles deMercado, which is the subject of a controversial acquisition bid by the Port-of-pain-based Angostura.

The Calla Lilly, held shares, on the basis of the US$10.65 offer price Angostura floated for Lascelles' ordinary stocks, are worth over US$100 million. But, McConnell and Ashenheim suggested that, like the preference shares controlled by Calla Lilly, they held them in trust for all Lascelles shareholders.

The fact that the Calla Lilly stocks were out of the pool in which Angostura priced its bid helped to jack up the offer price by nearly 11 per cent.

SEEKING CLARITY

In a separate statement, Angostura says it is seeking "clarification" from the Financial Services Commission (FSC) and the Jamaica Stock Exchange (JSE) on how to proceed after the exchange last week ruled that Angostura's offer for ostensibly 49.24 per cent control of Lascelles was in fact a takeover bid.

"We hope to have these matters resolved within the next few days and will be communicating with shareholders soon to advise on the proposed course of action," says the statement by Angostura executive director, Michael Carballo. After weeks of speculation that Lascelles - a Jamaican champion whose core business is the manufacture of rum - was being targeted for a takeover, Angostura 10 days ago announced its offer.

It said that it was seeking to acquire over 86 million of Lascelles' 96 million ordinary shares and more than five thousand of its 60,000 preference shares.

With 1,600 ordinary shares affording a single vote, but a one-to-one vote for the prefs, each class of shares, combined, carried the same number of shares.

But, through the control of Calla Lilly, which held almost all of the prefs and over 9.5 million of the ordinaries, Ashenheim and McConnell, chairman and CEO respectively, effectively controlled the conglomerate with more than 46 per cent of the votes.

The Angostura offer turned controversial when it emerged that the deal involved the transfer of Calla Lilly for J$2 and that there was an arrangement for the payment of US$10 million if Angostura failed to pursue its offer on the agreed terms.

The JSE held that the arrangement meant that Angostura would gain about 90 per cent of Lascelles, triggering its takeover rule, and demanding that the suitor make a bid for all the shares.

The JSE rule is triggered by an offer that gives an entity above 50 per cent control.

There were also concerns in the market about the price of the seemingly very valuable ordinary shares in Calla Lilly.

PROTECTING STOCKHOLDERS

But in their advertised press statement, McConnell and Ashenheim said that they always viewed controlling stake in Lascelles via Calla Lilly as being "for the protection of all stock-holders in the company and, in the event of an offer, for all stock- holders' benefit."

On that basis, when they were approached by Angostura with its bid, the plan was to part with the stocks for a "nominal amount", while ensuring that Lascelles' stockholders receive, on a pro rata basis, the value that would have gone to Calla Lilly.

This, in the event, was reflected in the premium, over the market trading price, in the Angostura offer.

Says the statement: "If the value of the Calla Lilly stake had not been reflected in the offer price, the stockholders would not have been offered US$10.65 per stock unit, but the lesser sum of US$9.60, because the total price offered by Angostura would have had to have been divided among a larger number of stock units.

"Calla Lilly states categorically that neither it nor any of its shareholders (Ashenheim and McConnell) or directors have received or will receive any benefit or entitlement to any benefit, arising out of any the transactions contemplated by the bid, other than those which will be set out in the bid document to be sent by Angostura to the stockholders."

The break-fee agreement, to defer Angostura from defaulting, was inserted to protect shareholders, they said.

In its statement, Angostura, too, insists that there were no hidden side agreements to the deal.

"We hereby unequivocally confirm the details of all agreements have been fully disclosed in our offer documentation," says Carballo.

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