ICBL takeover puts eyes on NIS as a large shareholder

A takeover bid has been launched for control of all the shares in the Insurance Corporation of Barbados (ICBL).

Paynes Bay Finance Inc., the company that has already purchased the majority shares in ICBL from Bermuda Fire & Marine (BF&M), is moving swiftly to acquire the remaining shares in the publicly traded company once owned by Barbadian taxpayers.

Paynes Bay Finance Inc., which is owned by a Canadian millionaire businessman Joe Poulin who now resides in Barbados, has set up a wholly owned company – Hamilton Finance Limited – to undertake the acquisition of all the issued and outstanding common shares.

Poulin, who is now chairman of ICBL, had confirmed to local media that Paynes Bay Finance had paid $35.8 million to BF&M for the majority stake in ICBL.

He indicated that while the company had other investments in the Middle East, Canada and the United States, the ICBL purchase, an active business, would be their first and biggest.

Last December Poulin was named Airbnb’s vice-president.

In a regulatory filing and notice published yesterday, Hamilton Finance Limited is offering just US$0.89 or BDS $1.78 per share.  Shareholders have until 3 p.m. on October 20 to make up their minds on whether to accept
or reject the offer.

ICBL shares last traded on the Barbados Stock Exchange at $3.00 per share.

Already, market watchers are observing that the offer price from the new majority owner was significantly lower than was expected.

According to the notice to shareholders from the directors of ICBL and signed by Chief Executive Officer Geoffrey Scott: “The Directors wish to inform shareholders that the company has received a take-over bid offer and take-over bid circular given at September 18, 2020 from Paynes Bay Finance Inc through its wholly owned subsidiary Hamilton Finance Limited to acquire all the issued and outstanding common shares in the company at a price of USD $0.89 per common share in cash.”

The ICBL directors noted that it will be issuing a Directors’ Circular to shareholders not less than seven days before the offer expires. That circular will provide a recommendation from the directors on whether shareholders should accept the offer.

“Shareholders are advised that it is in their financial interest not to make any decision on the sale of their shares until they have received the Directors’ Circular,” Scott urged investors.

In the meantime, all eyes are on the National Insurance Scheme (NIS) which holds almost four million shares in ICBL.

The current offer would represent an immediate windfall of almost $7.1 million at a time when the social security scheme is haemorrhaging cash due to the record-level payouts for unemployment claims due to the COVID-19 pandemic.

Accountant and interim head of the Barbados Association of Corporate Shareholders Doug Skeete told Barbados TODAY: “The takeover bid was inevitable because BF&M sold 51 per cent and the trigger is 25 per cent. One shareholder has said that this kind of move deprives them of shareholding in public companies.

“For the price that BF&M sold the 51 per cent, I got the impression they were trying their best to get rid of the company to get it out of their portfolio for obvious reason. Its image is tarnished and that clearly would generally not engender anyone to pay a premium. So the price may be way below the trading price.

“The price sounds low but . . . if they get 80 per cent of the remaining 49 per cent of the outstanding shares, there could be a compulsory acquisition of the remaining shares,” Skeete noted.

Another commentary said Hamilton Finance Limited may consider the $1.78 offer a price that was above the book value
of the ICBL shares.

ICBL, which was established in 1978 as a statutory corporation and subsequently privatized in December 2000, has been the subject of a scandal that involved two of its senior executives and former Minister of International Business Donville Inniss.

Inniss was recently convicted of money laundering and bribery charges in the USA, related to money paid to him by the company.

The Bermuda-based BF&M bought the majority stake in ICBL in 2005 for almost US$26 million when the Government sought to divest some of its investments in state corporations.

Two days ago Barbados TODAY reported that two of ICBL’s independent directors had resigned.

In filing under the Barbados Securities Act, ICBL has given notice that directors Juanita Thorington-Powlett, a retired permanent secretary who served on the board since 2001, and Toni Jones, an attorney at law, had offered their resignations from the board.

Thorington-Powlett and Jones were replaced by businessman Vicky Bathija and property development consultant James S. Edghill, respectively.

The other board members are chief executive officer Geoffrey Scott, Goulbourne Alleyne, Jennifer Hunte, Gordon J. Henderson and Sir Paul Altman.

According to the take-over bid offer Thorington-Powlett and Alleyne “beneficially owned or have control or direction over” securities of ICBL in the amount of 500 and 24,992, respectively. (IMC1)