Slapped with an injunction, which has temporarily put the brakes to their planned sale of Banks Holdings Limited (BHL), directors today appeared to be pondering their next move, even as the Trinidadian conglomerate ANSA McAL confidently predicted that its legal challenge would be upheld.
“We are very confident we will be successful,” Nicholas Mouttet, president and chief executive officer of ANSA McAL said during a news conference today.
It followed a 6 p.m. order issued by Chief Justice Sir Marston Gibson on Tuesday, effectively blocking all further sale proceedings until next Wednesday.
Mouttet, in welcoming the CJ’s move, insisted that it would redound to the benefit of all shareholders, whom he said were not being given a fair deal by BHL directors.
However, the company’s directors today accused the Trinidadian conglomerate of going behind their backs to mount the legal action even though they had rejected a request from ANSA McAL executives in a meeting on October 27 to legally challenge a contentious clause in the BHL loan agreement with SLU Beverages Limited.
“We were not informed that this hearing was taking place when they [ANSA McAL] had the ability to inform us so that we could be present and the other interested parties could be present to make our arguments before the court. So they in fact secured an ex-parte order behind our backs,” BHL’s legal counsel Barry Gale QC told journalists during an earlier media conference at the BHL’s office in the Pine.
He explained that the BHL could not consent to legal action on the grounds that it had received technical, financial and legal advice before entering the agreement with SLU and had also benefited from the deal.
Gale further pointed out that BHL/SLU agreement requires that any dispute be settled through arbitration in Miami, applying New York Law, while warning that this would have implications not only for the company but shareholders.
“The board would have to, in those circumstances, commence proceedings in a foreign jurisdiction which could be very expensive, protracted to the company and certainly not in the interest of shareholders, particularly in the environment of an ongoing competing bidding process,” Gale told reporters.
“The effect of that would be as we would have now seen from the recent court order to bring everything to a stop. Shareholders who are anxiously looking forward to a premium on their shares will now may not reap the benefits of the offers that are presently on the table,” he said.
Moreover, Gale insisted that ANSA McAL knew about the clause and its potential impact from the time it made its initial offer of $4 for BHL shares.
“. . .they certainly knew about when they made their second bid of $6 dollars because by then they would have done their due diligence, which would have included examination of that agreement,” emphasised the attorney.
ANSA officials have denied knowing about the controversial clause when the first bid was made.
However, during today’s press conference at the Accra Beach hotel, the company’s legal counsel Patterson Cheltenham, QC, acknowledged that “in relation to the second bid, they [Ansa] were very clear to say they reserved their position expressly because at that time they had some knowledge of some aspects of [the contentious clause].”
He also said the ANSA team was “very careful” to insert into the bidding document that they expressly reserved their legal position.
Cheltenham said at the heart of the legal challenge was the validity of the controversial clause in the 2010 loan agreement, which gives SLU the advantage in the sale.
“ANSA is challenging as a shareholder, what, in essence, it contends is that as a shareholder its position has been prejudiced and, by extension, that of all the shareholders has been prejudiced.”
The BHL/SLU agreement stipulates that if any person or group becomes the direct or indirect ultimate owner of BHL shares representing more than 25 per cent of the total voting power of the BHL shares, then “SLU has the ability to require BHL to re-purchase, at $10.00 per share, the 13,250,000 common shares which were issued to SLU on conversion of the debt in 2010.
“Our view is that only where there is certainty can ANSA make an informed business decision. It is surely in the interest of shareholders for ANSA to be able to bid unrestrictedly so that shareholder value can be maximized during a competitive bidding process.”
The ANSA attorney therefore advised shareholders to hold on to their shares and assured that they would not be disadvantaged.
“There is no need to fear that by doing nothing your position should be prejudiced. When bidding resumes, the bidding process will start from the point where the bidding stopped,” Cheltenham explained.
Meanwhile, the BHL attorney said it was too premature to say whether the company would contest the injunction. However, Gayle maintained there was nothing irregular about the agreement, which he said was common in an equity financing transaction.
ANSA however maintained that regardless of the outcome of the injunction, its $6 offer would stand.