As the Trinidad and Tobago-based regional conglomerate, ANSA McAl, prepares to head back to the law courts in its bid to buy out Banks Holdings Ltd (BHL), 20 small shareholders today filed a class action suit in the Supreme Court against BHL.
Speaking on behalf of the other 19 small shareholders, chartered accountant Douglas Skeete told Barbados TODAY that a “poison pill clause” in an agreement with SLU Beverages Ltd, of which they were unaware, led to their decision.
SLU Beverages is owned by Brazilian beverage giant, AMBEV S.A., which is also bidding to take over BHL. St Lucia-registered SLU Beverages became BHL’s largest single shareholder after helping to finance the construction of the new BHL brewery at Newton, Christ Church five years ago.
Pointing out that even some of the directors were not aware of the “poison pill clause”, Skeete said it “committed the company to pay $132.5 million for 13,250,000 shares to SLU if any shareholder were to acquire more than 25 per cent of BHL shares”.
He went on: “The going price for a share was put at $10. That is the “poison pill clause”. Now you stop an investor when he hears that his company would have to pay out that sum of money. … The investor would have to buy those shares at $10 instead of the $6 being offered.”
“As a result of this material information not being communicated to the shareholders, the 20 small shareholders have filed the class action suit in the Supreme Court,” he explained. “We have gone to the Supreme Court to ask the court to look at this matter and make a determination . . . . . The additional terms and clauses were not communicated to us in 2010, but only now as a result of this take over bid.”
Skeete said this class action suit “is separate and distinct from any suit brought by ANSA McAl”. Attorney-at-law, Alrick Scott, has been retained by the 20 shareholders to present their case in the Supreme Court.
Giving further background to the filing of the class action suit, Skeete told Barbados TODAY that it seeks to deal with what BHL referred to as a “convertible debt purchase agreement”. He explained that under the agreement, the US$28 million borrowed from SLU, would be converted into shares in the company instead of being paid back in cash.
Skeete stressed that this aspect of the agreement was communicated to shareholders. He further explained that shareholders were made aware of a situation where $26.5 million of the US$28 million loan would be converted into common shares. He also said shareholders were informed at the time the deal was struck in 2010/2011, that the company would have to seek SLU’s approval to issue any new shares.
On Tuesday, days after the Supreme Court lifted an injunction sought by ANSA McAl to halt trading of BHL shares, the Trinidadian conglomerate announced that it was heading back to the law courts with a class action suit against BHL but, on this occasion, it was teaming up with major BHL shareholders who collectively own over 100 000 shares.
President and Chief Executive Officer Nicholas Mouttet also served notice that ANSA McAl intended to appeal the decision by Chief Justice Sir Marston Gibson to lift the injunction. The company said the class action suit was aimed at getting the same contentious clause removed by BHL/SLU agreement.
Meanwhile, in a release issued late this afternoon, ANSA McAl informed shareholders that it was raising its bid offer to take over BHL to $7 per common share from $6.