Trying to catch a'Tiger' by the tail

DONALDSON

DONALDSON

Published On:Wednesday, May 19, 2010

* Minority ABDAB investors say they have received no details on $120-$125m Heineken buyout, and question whether they will get dividend payout

* Regulator says position at odds with company's representations to it that shareholders 'approved the deal'

* Investors include DPM and family; Sir Orville; Cabinet Minister, Sir Albert Miller and assorted leading businessmen

By NEIL HARTNELL

Tribune Business Editor

Minority shareholders in Associated Bahamian Distillers and Brewers (ABDAB) were yesterday questioning whether they would benefit from Heineken's purchase of the company's stakes in Commonwealth Brewery and Burns House, telling Tribune Business they had received zero information on the deal - an assertion seemingly at odds with representations to the Securities Commission.

This newspaper contacted several shareholders in the investment vehicle controlled by Sir Garet 'Tiger' Finlayson and his family, all of whom told Tribune Business that they had received no information about the details of the transaction, and nor had their approval of the deal been sought.

T. B. Donaldson, the former Central Bank governor and current Commonwealth Bank chairman, who holds some 604 ABDAB shares, told Tribune Business: "The answer is no", in response to whether he had received any information on the Heineken transaction/.

He added: "I doubt whether any shareholders received anything. I seldom receive anything from, them. I'd be quite surprised if anyone received anything at all." When asked whether he hoped to receive a dividend from ABDAB, as a result of the company receiving a nine-figure sum from Heineken for its stakes, Mr Donaldson replied: "I hope so, but I never hold my breath."

Kenwood Kerr, Providence Advisors' chief executive, who holds some 132 ABDAB shares on trust for the Bahamas Electricity Corporation (BEC), also confirmed that he had received no communication from ABDAB on behalf of his clients.

"I suspect that they would," Mr Kerr said, when asked whether his client hoped to receive a dividend from ABDAB as a result of its cash windfall, "but I've not received any correspondence to that effect."

Michael Anderson, president of RoyalFidelity Merchant Bank & Trust, which holds more than 35,000 ABDAB shares on trust on behalf of 10 clients, also told Tribune Business that he and the company were "not aware" of any communications relating to the Heineken buyout being received.

The situation once again raises questions about the level of protection afforded Bahamian minority investors in the capital markets, given that ABDAB is a supposedly 'public' company whose securities are traded on the over-the-counter market.

In theory, all ABDAB investors should have been provided with full disclosure - including all financial details - of the transaction, and asked to vote on it at an Extraordinary General Meeting (EGM).

While approval of the deal was never in doubt, given that Sir Garet - through General Bahamian Companies (GBC) - owns some 1,747,383 shares or a 58.5 per cent majority of the outstanding stock, it appears that the process was sorely lacking.

Hillary Deveaux, the Securities Commission's executive director, yesterday described the comments from ABDAB minority investors as "interesting", telling Tribune Business that the capital markets regulator had been told shareholders had approved the deal.

"The information that I'm aware of does not support that," Mr Deveaux said of investor comments relayed to Tribune Business. "My understanding is that it has the full support of all the shareholders of ABDAB, and that they have advised the shareholders throughout this process of what was going on.

"We're on top of it, but to the best of our knowledge, this received the approval of the shareholders of ABDAB. That is my understanding, although I have not been dealing with it at that level.

"We are conducting a review of this matter as we speak. I have not seen a final report, but it is something we are pursuing."

A source close to ABDAB told Tribune Business that the company planned to continue operating as an investment vehicle, and would seek out opportunities for its cash pile.

"From my understanding, they plan to continue as a going concern, and in very short order they will probably meet with the shareholders to tell them what the plans are," the source said. "Over the years, ABDAB has been extremely good to its shareholders."

Sources suggested yesterday that, based on the fact that the Government required Heineken to offer 50 per cent of what it acquired from ABDAB to the Bahamian public, the latter had received $120-$125 million for its Burns House and Commonwealth Brewery stakes. This was based on the $60-$65 million IPO valuation given by Burns House managing director.

A copy of the ABDAB shareholders' register as at September 15, 2009, which has been obtained by Tribune Business, shows that some 187 investors own the firm's 2,985,262 issued ordinary shares.

Apart from the 58.5 per cent owned by General Bahamian Companies, Sir Garet is also supported by a further 56,250 shares owned by Maratani Holdings - believed to be a vehicle for his children, Mark, Rae, Tanya and Nikki. Together, those holdings account for a 60.4 per cent stake.

Further support would come from Bradley Roberts, the former Cabinet Minister and current PLP chairman, who is the third largest shareholder with some 97,000 shares. Franklyn Wilson and his family are also prominent shareholders.

Other prominent shareholders include Deputy Prime Minister Brent Symonette and his family; Cabinet minister Neko Grant (a former Burns House executive); Sir Albert Miller and his Modalena Ltd business; Sir Orville Turnquest and his late wife; accountant Basil Sands; attorney Godfrey Kelly; Doctor James Iferenta; and accountant Macgregor Robertson.

Going forward, Burns House and Commonwealth Brewery will have a combined 530-strong workforce, with 430 at the former and 89 at the latter.