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Local News>CMP buyer in breach - Mandatory offer from Castelo Holdings still pendingSusan Gordon - Business Reporter |
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Castelo Holdings BV, a Curaçao company which last year acquired 79.66 per cent of listed company CMP Industries Limited, has failed to make a mandatory offer to minority shareholders within the prescribed timeline.
Myers Fletcher and Gordon, lawyers for CMP Holdings - the owner of CMP Industries - confirmed that the deal had been executed.
Sold To Castelo Holdings
"It was sold to Castelo Holdings," attorney Gavin Goffe said Tuesday.
The Financial Gleaner was advised by the Jamaica Stock Exchange (JSE) that Castelo's chairman is Jamaican lawyer Harold Brady, who, on Thursday, declined immediate comment, citing his schedule.
Brady, who is the lawyer for the embattled Cash Plus Group, cut off queries on the CMP deal, saying he was busy.
"I am in a board meeting at the moment," he said, adding he was next headed for court and would not be available.
Goffe said the deal was finalised August 24, but declined comment on the price fetched for the dormant manufacturing entity.
A condition of the agreement, according to a notice posted on the JSE, November 29, was for the offer to me made within 10 days of the deal being finalised.
The JSE rules allow 30 days, a deadline which expired three months ago.
"The law, according to the Securities Act on mergers and takeovers, and the JSE rules, is that the company needs to make an offer to the minority shareholders," said Street-Forrest.
The sale was executed under the laws of St. Lucia where CMP Holdings is incorporated.
The transaction would have given Castelo, a company incorporated in Curaçao more than 16 million of the more than 20.3 million listed units.
The value of the deal was not disclosed, but the CMP Industries stock began trading around the time at $4.25 per share — coming from a one-year low of $1.60 — putting its stock market value at $86.4 million.
Assets Audited
Its assets at financial yearend March 2007 was audited at $83 million, largely linked to potential income from rental of its warehouse and office buildings at Marcus Garvey Drive, Kingston.
CMP, a former manufacturer, was dormant at sale.
Revenues from its properties last year rose above $20 million, while profits topped $7 million.
Jamaica's stock exchange rules, said Street-Forrest, require that the mandatory bid occur within a month of a takeover, outlining to investors the terms of the offer and the broker handling the transaction.
"This is to ensure that the minority shareholders can determine whether they'll sell the shares or keep them," said the JSE executive.
"That's where the difficulty is. They (Castelo) have not yet sent out that offer document to the minority shareholders and have breached the Securities Act."
The Financial Gleaner has learned that Castelo had initiated discussions with M-VL Stockbrokers Limited to structure the offer.
"We have been approached but apart from that nothing has happened," said M-VL's Ed McKie. "We are dealing with a lawyer. It was sometime ago."
Street-Forrest said the exchange was in dialogue with the company about making the offer.
But with more than four months into the takeover, the JSE now seems ready to move beyond talk.
"We have been in dialogue with them and will have to take a firm decision," said Street-Forrest.
"My time frame will be within this month and that's a firm decision I've taken."
A more than 50 per cent acquisition of any listed company automatically triggers a mandatory offer to minority shareholders.
sabrina.gordon@gleanerjm.com