After a spirited debate on Tuesday night, shareholders of Cayman National Corporation Ltd. voted to remove a restriction on anyone owning more than 10 percent of the local bank’s stock.
The move paves the way for the Republic Bank Trinidad and Tobago (Barbados) Ltd. to acquire majority ownership in Cayman National.
Republic Bank is offering US$6.25 per Cayman National share, which is US$3.25 more than what the stock was trading at before the offer was announced in early August trading – the share price has increased to US$5 since then. If Republic Bank does not obtain at least 51 percent of Cayman National, then the acquisition will be canceled, the current shareholders will retain their stock, and the bank will remain Caymanian owned.
Before shareholders voted to amend Cayman National’s articles of association to remove the 10-percent ownership threshold, a number of them raised objections to having a Trinidadian organization take over Cayman’s only locally owned bank.
Businessman A.L. Thompson was one of the most vocal objectors.
“They want this company for a reason. It’s probably because of their image,” he said of Republic Bank. “But I don’t trust them, I don’t know who they are, and I don’t trust the whole country.”
Mr. Thompson asked Cayman National’s board of directors whether they negotiated the US$6.25 per share, and what happens if shareholders want to sell at a higher price.
Cayman National chairman Truman Bodden said that the bank received an unsolicited offer from Republic Bank. Cayman National then hired Deloitte to value the business, and it was determined that Republic Bank’s offer of US$6.25 per share was a good price.
With that established, the Cayman National directors were legally bound to bring the offer to the shareholders, Mr. Bodden explained.
Other shareholders expressed confusion over what exactly they were voting for that night, asking whether they would be forced to sell their stock if the resolution passes.
Mr. Bodden and CEO Stuart Dack explained multiple times throughout the 90-minute meeting that the resolution at hand was about removing the 10-percent ownership threshold on the bank. Even if that threshold is lifted, shareholders can still choose not to sell to Republic Bank, they said.
The board members also explained that the decision to sell will not be put to a vote. Instead, each individual shareholder will choose whether to sell his or her shares by Oct. 22, and if at least 51 percent are sold to Republic Bank, then the acquisition will be finalized, subject to government and regulatory approvals.
In response to concerns about Republic Bank’s intentions for Cayman National, Mr. Dack said that the Trinidad bank has committed to largely maintain Cayman National as it is.
“All indications from Republic is that they very much want to leave things as they are at the moment. Cayman National is a very profitable business,” he said. “That’s why they want to leave staff as it is, that’s why they remain on all three islands, and leave the board majority Caymanian. They want to leave the culture of the business intact and to continue to do well, so they can get a return on their investment. That’s really their strategy.”
While some Caymanians may be upset at potentially losing the only locally owned bank, that is the risk of running a profitable, publicly traded company, Mr. Dack said.
“We’ve become a victim of our own success,” he said.
Near the end of the debate, Mr. Thompson said he still had many questions about the potential sale, and made a motion to delay the vote until more information about Republic Bank and other issues was provided. Another shareholder seconded the motion, drawing applause from dozens of other investors in attendance.
However, “I’m afraid that’s not how things work,” said Mr. Bodden, explaining that there was already a motion on the floor that needed to be voted on.
The Cayman National chairman called for those in favor of lifting the 10-percent ownership threshold to raise their hands, and about half of the room did so. He then asked for those who were against the motion to raise their hands, and the other half of the room did so.
But the decision was a one-share, one-vote ballot – not one person, one vote.
Once the shareholders turned in their ballots and the results were checked by accounting firm PricewaterhouseCoopers, the result was not nearly as close: The motion carried with 79.7 percent of the voting shares in favor and 20.3 percent against. Five of the six directors voted in favor of the motion, with Clarence Flowers Jr. being the lone holdout.
Shareholders have until Oct. 22 to decide whether they want to sell to Republic Bank, unless that deadline is extended.