It was not a poison pill agreement!
A day after lawyers for Banks Holdings Limited (BHL) and Trinidad’s ANSA McCAL traded strong words on a contentious 2010 loan agreement, the third party in what is turning out to be a vicious BHL takeover war, is also having its say on the matter.
In a detailed press statement, AMBEV said its $56 million loan to BHL was to assist the Barbadian company in setting up a new plant at Newton, Christ Church, but not to give it (AMBEV) any unfair advantage in any future business deals.
“AMBEV/CND acquired SLU in September of this year, after a long and careful evaluation of BHL and after scrutinizing all necessary elements to ensure an enforceable contract exists between SLU and BHL,” the statement said.
The Latin American beverage giant was adamant that the loan agreement was completely valid and enforceable and had been for five years, while charging that ANSA McAL was merely doing everything in its power to block it from entering Barbados and ultimately Caribbean Community (CARICOM) markets.
The latest salvo in the bidding war follows a move by the Trinidadian company to the law courts this week to secure a court injunction, which effectively freezes the sale of BHL until next Wednesday.
“Don’t let ANSA freeze Barbados’ growth,” was the warning from the Latin American beverage giant, which went as far as to suggest that a takeover of the Barbadian brewery by the Trinidadian company was neither in the best interest of shareholders nor the country.
AMBEV, the parent company of SLU Beverages, also signalled it was prepared to fight any legal “manoeuvre” as it vowed to do all it could “to release Barbados from such an imposed freeze”.
The Brazilian company, which has offered a share price of $5.60, said the move to the court would not only jeopardize the reputation of BHL and Barbados, but also put shareholders in a “very disadvantageous position” with the sale process now on hold and at risk of being stalled for several more years.
“You can lose the opportunity to monetize your shares for a price that is higher than the top range of the independent valuation report by KPMG,” the company said in a direct appeal to BHL shareholders.
In explaining their move to the law courts, Ansa McAl officials charged yesterday that the playing field in the bidding process for Barbados’ main beverage manufacturer was uneven.
Ansa is challenging a controversial exit clause in a 2010 BHL/SLU loan agreement, which it believes is not in the best interest of shareholders, but in fact gives AMBEV an unfair advantage.
That 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 in the Barbadian company, 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.
“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, ” ANSA’s attorney Patterson Cheltenham QC has said.
However, BHL officials have countered saying the clause is not unusual in an equity financing transaction such as the BHL/SLU deal.
The Interim Chairman of the Special Committee of BHL’s Board, Christopher DeCaires, told reporters yesterday the directors’ actions were above board as he pointed out that shareholders had benefited substantially as a result of the deal.
“From a process point of view the directors went through an appropriate process for the funding and for getting this agreement and in fact the results of the company at the end of the day are significant.
“The shareholders have benefited significantly from this,” he stressed, adding, “I wonder if the investment had in fact not materialized to the extent it has, whether we would have had two significant companies sharing an interest that they are sharing in at the moment, and whether our shareholders who have an investment in the company would have realized that investment uplift which at the moment is going from $2.49 to $6.00.”
ANSA, which is poised to pay more than $400 million if its acquired BHL has also been outlining big plans for the entity.
Company President and Chief Executive Officer Nicholas Mouttet said, “We see Banks as an iconic brand in the region, some being in our group already, Stag, Carib and Red Stripe. We see Banks as filling that last piece in the puzzle and adding to those Caribbean icons . . . . For many years Banks and Carib have competed over small markets and we see a huge opportunity for those companies coming together to take advantage of synergies in production.”
However, AMBEV has argued that ANSA, which has a strong presence in the region, would be threatened if a strong competitor was based in Barbados.
It has also questioned whether ANSA was really “interested in stimulating the local brands and economy of Barbados”, while touting its own plans to double the capacity of the BHL plant and turn Barbados into a hub to export for the Caribbean region.
“BHL will be so important to us that we will install our headquarters for the region in Barbados. We know that we can transform the company as the regional champion within CARICOM,” AMBEV said.