$60-65m IPO for Heineken

Published On:Tuesday, May 18, 2010

By NEIL HARTNELL

Tribune Business Editor

The Commonwealth Brewery/Burns House 25 per cent initial public offering (IPO) will be valued at between $60-$65 million, Tribune Business was told, as the companies pledged the sale would happen this year following yesterday's completion of the buyout of Sir Garet 'Tiger' Finlayson's family investment vehicle.

LeRoy Archer, Burns House's managing director, confirmed to this newspaper last night that the combined companies had been valued at $240 million, meaning a 25 per cent IPO to Bahamian institutional and retail investors would be worth $60-$65 million - making it arguably the largest equity IPO in Bahamian capital markets history.

Mr Archer declined to detail the "record breaking profits" that the release confirming the buyout, which Tribune Business revealed in February this year, referred to. This, he added, would be detailed in documents published later this year in relation to the IPO.

However, Mr Archer did reveal that in 2008, "Commonwealth Brewery and Burns House had sales combined of $150 million on volumes of 200,000 hectolitres".

He added that the buyout, which currently leaves Heineken in 100 per cent control of Commonwealth Brewery/Burns House, gave the combined entity "a great opportunity to see what we can do out of the box", including expanding export markets for its homegrown Kalik beer.

Confirming that an "internal corporate restructuring" would now take place following the exit of the Finlaysons and their Associated Bahamian Distillers and Brewers (ABDAB) vehicle, Commonwealth Brewery/Burns House pledged that although they had been given 18 months by the Government to do so, the IPO would take place before year-end 2010.

That is likely to have Bahamian brokerage and investment banking houses, all of whom are keen to win the lucrative placement agent role and the fees to go with it, salivating. They are likely to start breaking bank deposits now, so as to ensure they and institutional clients have the surplus assets ready to invest.

The release on the buyout's completion also, somewhat surprisingly, said the Bahamian government was prepared to become a shareholder in the combined entity, as it had "indicated" it would purchase any shares not subscribed for by the Bahamian public during the IPO - effectively meaning it is acting as a guarantor/underwriter for its success.

"I haven't spoken to anyone ready to place it, but if I were to guess and if you ask me what my wish list is, I would say by November this year," Mr Archer said of a date for the IPO.

Asked about its value, he told Tribune Business: "If you take the total value of the companies to be $240 million, 25 per cent of which is...... It's about $60-$65 million."

Tribune Business revealed last week that the IPO would likely be valued in the $60 million range, and correctly reported that the deal would be signed imminently - as happened yesterday. Heineken acquired the 47 per cent stake ABDAB held in Commonwealth Brewery (it already owned the remaining 53 per cent) and the 78.8 per cent it had in Burns House.

Both sides were tightlipped on the purchase price paid by Heineken, and what consideration ABDAB had received, although it had previously been suggested it was a $100 million or nine-figure sum. Some of the proceeds are likely to be used by the Finlaysons to pay down bank debt associated with their purchase and financing of the Solomon's Mines luxury goods chain, much of which is owed to Citibank.

The Finlaysons are also thought likely to use their cash pile to pursue other investment opportunities.

Meanwhile, going forward, Mr Archer said: "The challenge basically is it's one company, 0ne mission, one vision. We don't plan at this time to have any lay-offs, although I can't make any promises.

"I believe that as managing director you should have one step in the future, and look at new opportunities to grow revenues and cut costs. It's a great opportunity to see what we can do out of the box.

"I can only say that it's [the buyout] not an end; it's a new beginning, and we're going to look at all avenues to see how we can best manage the opportunities to achieve efficiencies. We already export Kalik to the US, and we are looking to see if there are any other opportunities."

Senator Jerome Fitzgerald's law office, Chancery Law Associates, advised ABDAB.

Heineken already has Board and management control at Burns House, which became the largest liquor distributor and wholesaler in the Bahamas via the 2000 purchase of Butler & Sands. The Board and management arrangement, concluded in 2004, provided the Finlayson family with the financing needed to complete the Solomon's Mines purchase.

Apart from the Finlaysons, ABDAB's third largest shareholder is understood to be PLP chairman Bradley Roberts. Its second largest shareholder is Sir David Gibbons, owner of the Colonial Group, which owns the Bahamas-based Atlantic Medical and Security & General insurance companies.

Bahamian capital markets history.

Mr Archer declined to detail the "record breaking profits" that the release confirming the buyout, which Tribune Business revealed in February this year, referred to. This, he added, would be detailed in documents published later this year in relation to the IPO.

However, Mr Archer did reveal that in 2008, "Commonwealth Brewery and Burns House had sales combined of $150 million on volumes of 200,000 hectolitres".

He added that the buyout, which currently leaves Heineken in 100 per cent control of Commonwealth Brewery/Burns House, gave the combined entity "a great opportunity to see what we can do out of the box", including expanding export markets for its homegrown Kalik beer.

Confirming that an "internal corporate restructuring" would now take place following the exit of the Finlaysons and their Associated Bahamian Distillers and Brewers (ABDAB) vehicle, Commonwealth Brewery/Burns House pledged that although they had been given 18 months by the Government to do so, the IPO would take place before year-end 2010.

That is likely to have Bahamian brokerage and investment banking houses, all of whom are keen to win the lucrative placement agent role and the fees to go with it, salivating. They are likely to start breaking bank deposits now, so as to ensure they and institutional clients have the surplus assets ready to invest.

The release on the buyout's completion also, somewhat surprisingly, said the Bahamian government was prepared to become a shareholder in the combined entity, as it had "indicated" it would purchase any shares not subscribed for by the Bahamian public during the IPO - effectively meaning it is acting as a guarantor/underwriter for its success.

"I haven't spoken to anyone ready to place it, but if I were to guess and if you ask me what my wish list is, I would say by November this year," Mr Archer said of a date for the IPO.

Asked about its value, he told Tribune Business: "If you take the total value of the companies to be $240 million, 25 per cent of which is...... It's about $60-$65 million."

Tribune Business revealed last week that the IPO would likely be valued in the $60 million range, and correctly reported that the deal would be signed imminently - as happened yesterday. Heineken acquired the 47 per cent stake ABDAB held in Commonwealth Brewery (it already owned the remaining 53 per cent) and the 78.8 per cent it had in Burns House.

Both sides were tightlipped on the purchase price paid by Heineken, and what consideration ABDAB had received, although it had previously been suggested it was a $100 million or nine-figure sum. Some of the proceeds are likely to be used by the Finlaysons to pay down bank debt associated with their purchase and financing of the Solomon's Mines luxury goods chain, much of which is owed to Citibank.

The Finlaysons are also thought likely to use their cash pile to pursue other investment opportunities.

Meanwhile, going forward, Mr Archer said: "The challenge basically is it's one company, 0ne mission, one vision. We don't plan at this time to have any lay-offs, although I can't make any promises.

"I believe that as managing director you should have one step in the future, and look at new opportunities to grow revenues and cut costs. It's a great opportunity to see what we can do out of the box.

"I can only say that it's [the buyout] not an end; it's a new beginning, and we're going to look at all avenues to see how we can best manage the opportunities to achieve efficiencies. We already export Kalik to the US, and we are looking to see if there are any other opportunities."

Senator Jerome Fitzgerald's law office, Chancery Law Associates, advised ABDAB.

Heineken already has Board and management control at Burns House, which became the largest liquor distributor and wholesaler in the Bahamas via the 2000 purchase of Butler & Sands. The Board and management arrangement, concluded in 2004, provided the Finlayson family with the financing needed to complete the Solomon's Mines purchase.

Apart from the Finlaysons, ABDAB's third largest shareholder is understood to be PLP chairman Bradley Roberts. Its second largest shareholder is Sir David Gibbons, owner of the Colonial Group, which owns the Bahamas-based Atlantic Medical and Security & General insurance companies.