All but one of the directors of local bank Cayman National Corporation Ltd. intend to sell their shares to the Republic Bank Trinidad and Tobago (Barbados) Ltd., according to a recently released directors’ circular, which provides more details about Republic Bank’s attempted acquisition of Cayman National.
The circular states that Truman Bodden intends to sell 1,100,000 of his 1,125,135 shares, bank CEO Stuart Dack intends to sell 20,000 of his 21,031 shares, Sherri Bodden-Cowan intends to sell 120,000 of her 125,639 shares, Bryan Hunter intends to sell 68,000 of his 69,338 shares, and Nigel Wardle intends to sell 60,000 of his 65,479 shares. They must maintain at least 999 shares each to remain on the board of directors.
The only director listed who does not intend to sell his shares is Clarence Flowers Jr., who holds 47,455 shares directly and another 1,137,078 shares through his family estate, according to the circular.
With the Republic Bank looking to buy up to 74.99 percent of Cayman National’s 42,350,731 shares for US$6.25 apiece, the transaction could reach nearly US$200 million. Republic Bank’s offer to shareholders is open through Oct. 22, and faces a crucial step on Tuesday, when a meeting will be held for shareholders to vote on whether to remove a restriction on anyone owning more than 10 percent of Cayman National’s shares – something that needs to be removed if Republic Bank is to acquire majority ownership.
Even if Mr. Flowers and other shareholders decline to sell their stock, the Republic Bank may still have the power to acquire minority shares if it buys more than two-thirds of Cayman National, according to the circular.
“If the [Republic Bank] acquires more than two-thirds of Cayman National Shares as a result of the Partial Offer, the [Republic Bank] will have the ability to pass a special resolution approving a statutory merger which may result in the compulsory acquisition of Shares held by minority shareholders, subject to certain conditions,” the directors’ circular states, warning, “In that situation, dissenting Shareholders would be entitled only to payment of the fair value of their Shares, which, at such time, may be higher or lower than the offer price of US$6.25 per Share.”
Acquiring majority ownership would also give Republic Bank other powers, including the ability to pass ordinary and special resolutions at Cayman National meetings, which would allow it to amend the bank’s articles of association.
Additionally, Republic Bank would have the ability to control the composition of the board of directors, subject to the condition that the majority of the board remains Caymanian. Republic Bank intends to appoint its managing director, Nigel Baptiste, and executive director Roopnarine Oumade Singh to the board upon completing the acquisition, the directors’ circular states.
The directors’ circular also provides time lines and caveats for how long Republic Bank would be required to maintain the composition of Cayman National. For instance, Republic Bank has committed to not institute systematic layoffs or redundancy for at least five years, “unless there is a significant adverse economic change or compelling business reason to do so,” the circular states.
The circular further states that Republic Bank does not intend to introduce any major changes to the business or operations of Cayman National, to discontinue the employment of the employees of Cayman National, or to re-deploy the fixed assets of Cayman National, except in the ordinary course of the business – “provided, that [Republic Bank] retains the flexibility at any time to consider any options in relation to Cayman National which the [Republic Bank] may regard to be in the interest of Cayman National as part of a wider corporate group.”
As for the name and branding of Cayman National, Republic Bank has committed to maintaining those things until at least Dec. 31, 2023, according to the circular.
The circular recommends the sale, stating that it is a good value for Caymanian shareholders, with the Republic Bank’s offer of US$6.25 per share being a US$0.75 premium over the stock’s current trading price – that price has increased from $3 in early August when the potential offer was announced. The circular includes an opinion from Deloitte, which states that the auditor believes the proposed transaction to be fair, from a financial standpoint, to shareholders.
Republic Bank Trinidad and Tobago (Barbados) Ltd. was incorporated in Barbados in 1999, and is a part of the Trinidad-based Republic Financial Holdings Ltd., which was originally called Colonial Bank when it was formed in 1837, according to the organization’s website.
Republic Financial Holdings Ltd. has more than $10 billion in assets, owns banks in Guyana, Grenada, Suriname, St. Lucia, and Ghana – as well as having a class B bank in Cayman, Republic Bank (Cayman) Limited – and has more than 4,000 employees in Trinidad alone, its website states.