banks_beer

SLU Beverages Limited Takeover of Banks Holdings Limited (BHL)

Submitted by Atrue Freeman

banks-beerHow is the bid by SLU Beverages Limited to takeover Banks Holdings Limited (BHL)  likely to playout?

History of similar events suggests that BHL’s directors will have a significant, possibly the most significant, influence on the outcome […]in relation to BHL’s small shareholders.

It may be worthwhile to explore how the directors of BHL are likely to perform vis a vis the performance of the directors of Light & Power Holdings Ltd. when Emera Inc. launched its bid to takeover LPH.

My recollection of the endgame in Emera’s takeover of LPH is that the LPH directors commissioned and received a valuation of approximately $25+ to $32+ per LPH share and recommended that shareholders accept the lower end of the valuation of $25+.  This notwithstanding that LPH’s main business was the provision of an essential service (electricity) and that LPH was a monopoly (only entity providing the essential service that it did).  It certainly appeared that there was a strong case for the directors to recommend to the shareholders that a price nearer to the upper end of the valuation be sought, even if it meant soliciting an alternative bid.

Would BHL be a good fit for Goddard Enterprises Ltd. and would GEL respond favourably to an invitation to bid, even a stock for stock bid, for BHL?

The below link describes the opposition to SLU Beverages Ltd.’s acquisition of its initial equity interest in Banks Holdings Limited at $4 per share in 2010, the same price being offered in 2015 in an attempt to takeover BHL.  But this issue has a wider reach. Sagicor Financial Corporation owns around 6+% in BHL.  While a minority shareholder, SFC has the ability to be heard on this matter and the responsibility to defend its investments on behalf of its many shareholders.

http://www.broadstreetjournalbarbados.com/business-briefs/2011-02-15/shareholders-protest-actions-of-bhl-board

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130 Comments on “SLU Beverages Limited Takeover of Banks Holdings Limited (BHL)”

  1. Bush Tea September 28, 2015 at 5:28 PM #

    @Artax
    Theoretically, BHL directors did not do anything wrong
    +++++++++++++++++++++++++++++
    Presumably you mean to say that they did nothing ILLEGAL.
    The best crooks are those who can do their deeds under the cover of the Law…
    Slavery was the masterpiece of all time.

    Liked by 1 person

  2. Artaxerxes September 28, 2015 at 5:39 PM #

    @ Bush Tea

    Well stated, Bushie.

    Like

  3. de Ingrunt Word September 28, 2015 at 5:49 PM #

    @Artax, it was your very moving and pained commentary that originally drew me to this blog. I was surprised that you did not subsequently weigh on the big-league technical and financial matters so I am glad that you have now down so and brought your unquestioned gravitas to the discussion.

    I agree that “theoretically, BHL directors did not do anything wrong” as that was clear based on the fact that seasoned business gurus walked out of the meeting stymied.

    However, what is open to legal analysis is the fact that in issuing these shares they have apparently created a special class of shareholder (the Latin Capital group) as compared to their other fellow common shareholders.

    That is where the shenanigans and ‘wrong-doing’ is alleged.

    Like

  4. Artaxerxes September 28, 2015 at 5:54 PM #

    “Sagicor Financial Corporation owns around 6+% in BHL. While a minority shareholder, SFC has the ability to be heard on this matter and the responsibility to defend its investments on behalf of its many shareholders.”

    Interestingly, in 2010 Sagicor was confronted with a similar situation when its shareholders questioned the company’s decision to offer $11.7M common shares by way of private placement to National Insurance at a discount of 5% of the listed trading price at the time of the transaction.

    In a statement issued by Sagicor on the matter, Group president and CEO, Dodridge Miller, admitted that: “The natural effect of such a transaction would be some reduction in the percentage ownership of existing shareholders. In this instance, the private placement had the effect of diluting existing shareholders shares by 4% of their previous holdings.”

    Like

  5. Artaxerxes September 28, 2015 at 6:12 PM #

    de Ingrunt Word September 28, 2015 at 5:49 PM #

    “However, what is open to legal analysis is the fact that in issuing these shares they have apparently created a special class of shareholder (the Latin Capital group) as compared to their other fellow common shareholders. That is where the shenanigans and ‘wrong-doing’ is alleged.”

    BHL may have decided to issue shares by private placement for several reasons.

    The private placement may have been deemed appropriate at a time when BHL lacked a strong financial status, did not have the reputation to appeal to the public to invest, or the company was unable to afford the expenses of going public for its offerings. The directors may have seen SLU at the time as being strategically important and worth the offering of the low share price. There could also be some evidence of a “kickback scheme”, insider trading or some other form of impropriety on the part of the company and its directors.

    The Canadian Foundation for Advancement of Investor Rights (FAIR) is an independent national charitable organization that serves as the voice for “investors in securities regulation and a catalyst for enhancing the rights of Canadian shareholders and individual investors.”

    In an article on their web-site entitled: “Dilutive Private Placements To Insiders,” FAIR outlined a scenario involving a company called TSX and insider trading.

    “In the TSX Company Manual there is, in general, a 15% limit on discounts to market price on private placements to insiders. However, in recent years the TSX has failed to apply the spirit of the rule to more than a dozen deals involving oil and gas exploreco spin-off listings where discounts of 70% were common and dilution of public shareholders was sometimes in excess of 100%. The deals were structured so that the private placement to insiders took place immediately before the start of trading. These deals resulted in the transfer of wealth from public shareholders to insiders.”

    Like

  6. de Ingrunt Word September 28, 2015 at 6:14 PM #

    Artax, in reality such dilutions are of impact only to very large institutional shareholders and proportionally mainly. Much less impact on a mum/dad retiree or regular investor with a few hundred or few thousand shares.

    There is no absolute reason that the share price itself should fall precipitously or even fall slightly because of a special issue like this.

    As you saw from the reports the BHL share price has fallen steadily over the last 8+ years. The current price is well below their 10 year high so this transaction is of no blame on that score.

    Although for different reasons the share issue this brings to mind Buffet’s purchases of Goldman Sachs during the big crisis. He bought a sizable chunk of specially issued shares basically to loan money to the investment bank. In that instance shareholders might have otherwise taken a big hit where it not for that infusion.

    I suspect the BHL Board is playing a similar word game with this offer. But very different circumstances however. Very different.

    Like

  7. Gabriel September 28, 2015 at 6:39 PM #

    We are gradually losing control of the commanding heights of the economy and indeed of the real estate of Barbados.EWB warned it would happen if we are not observant.

    Like

  8. David September 28, 2015 at 6:51 PM #

    Good discussion, the legal versus a philosophy defined by Barbadians.

    Like

  9. balance September 28, 2015 at 6:52 PM #

    “We are gradually losing control of the commanding heights of the economy and indeed of the real estate of Barbados.EWB warned it would happen if we are not observant.”
    Mere politically fashionable rhetoric by EWB; after all he started it by cutting up for good or ill some of the most productive agricultural lands into housing developments like Ruby, Sandford, Norwood etc and introducing HARP which made projectiles for apartheid South Africa to Barbados.

    Like

  10. pieceuhderockyeahright September 28, 2015 at 8:32 PM #

    @ Balance

    “…Mere politically fashionable rhetoric by EWB…” I don’t think that that is fair to EWB and I will explain why.

    Not every visionary is capable of actuating that vision and it is for this reason that w have the Queen Bee and the Worker bees.

    Housing was/is/and always is going to be an issue for those of us who believe in the vision of owning “a piece uh de Rock, yeah right?”

    Barrow, with all of his “vision” and the initiation of “change” that he brought to the colony post independence, would have lain the foundation for other iterations on his vision.

    Free Education and School Meals and subsidized Housing had its place in history when Barbados was in its infancy and Sugar was King.

    The exigencies of the Global village augmented by WTO obligations put all of that EWB “man of vision” dream-state into the sniperscope of real real life and, some will say that. it has made that vision that EWB had come up a-wanting, seriously so.

    The model of any nation is to export more than you import or you end up a borrower, indebted to other people.

    Name me a leader during whose tenure there has been a concerted effort to expand the Forex Generating Sectors so aggressively that we have been able to put a dent in our Debt ratios??

    Just one, any one!!

    So in the blue corner we have this band of “wild coot cowboys who are trying to rob the stagecoach of US$700M led by a small time highwayman (and underperforming lawyer) a “leader”who only wants to secure his pension” and on the other hand “a despot” in waiting with a similar band of crooks intoxicated by the scent of pvssy waiting to be sampled and bitten.

    What is the differentiator that we Bajans can apply to decide that “these are the visionaries for 2018 and beyond?” We simply have none.

    When you are making money very few companies will sell out a profitable undertaking.

    When you have no vision, and are incapable of generating income, and make no bones about it, as incompetent as these directors are, they know when they have exceeded their respective capacities, and with that they wisely? jettison the burden to the SLUs of the world.

    Find a resource that they know nothing about and that they cannot monopolize and they cannot sell and you would have found the way out of this mess

    Like

  11. Artaxerxes September 28, 2015 at 9:33 PM #

    de Ingrunt Word September 28, 2015 at 6:14 PM #

    “There is no absolute reason that the share price itself should fall precipitously or even fall slightly because of a special issue like this. As you saw from the reports the BHL share price has fallen steadily over the last 8+ years. The current price is well below their 10 year high so this transaction is of no blame on that score.”

    Your above comments and assessment are incorrect, D Word. Perhaps you are “Ingrunt” to these types of transactions. Also, mentioning that share dilution would have “much less impact on a mum/dad retiree or regular investor with a few hundred or few thousand shares,” is irrelevant.
    An investment is an investment, no matter how small it may be. And you have to factor into that people invest what they can afford. A minimum wage worker’s investment of $500 has a “similar value” in theory to an investment of $50,000 by businessman Rawle Brancker.

    The dilution of share value is not based on a theory, it occurs as a result of private placement. The shares are sold at a DISCOUNTED RATE of the listed SEC trading price at the time of the transaction. Then you have to take the rules governing the facilitation process into consideration.

    I did not want to fully elaborate on this issue lest I am accused of “not being able to explain it because I don’t understand it”, or that I am “talking over the heads of BU contributors.”

    For further information on the rules that are applicable to facilitating placement shares, you could read the FSC’s Consultation Paper on the following web-site:

    http://www.fsc.gov.bb/attachments/article/128/Consultation%20Paper%20-20Private%20Placement%20Regime.pdf

    Like

  12. de Ingrunt Word September 28, 2015 at 10:07 PM #

    Artax, incorrect how? Let’s move away from the arcane rules and complex technicalities deal with proximate reality.

    So the company had 10 shares issued at $50 ea. Five of which are owned by Artax Inc, one by me and the four others distributed to other BU denizens. In comes the private placement from Latin Capital with a sale/purchase of 10 more shares.

    In one fell swoop they now own 50% of the company and you and us all only 25% each.

    Now the private placement with its discount price has key restrictions; like a time period before any of those shares can be sold and so on. As you said not too much unnecessary details but reality.

    Now unless there are other mitigating market or company factors why should the stock price be diluted or reduced on the open market?

    If decide to sell I can offer at the market price. Because Latin bought at a 5% discount of $47.50 does not affect my sale nor does it necessarily roil the market.

    Now in your case as a institutional investor who have moved from 50% ownership to a 25% stake and that is a problem.

    You have less influence at Board level and now need a greater investment to attempt a take over. In fact the new majority owner can stifle you completely in that regard going forward.

    Yes simple analysis but my original point was also very simple.

    The impact on the small shareholder need not be significant from a stock price position. And if they are relatively small stakeholders like my 1% which became a .05% the proportional dilution is also irrelevant in the scheme of life. I still retain my original value in the company.

    Really not clear where that veers from practical scenarios.

    Again I repeat I am not dealing here with the technical finance and specifics. You are absolutely right there.

    Like

  13. Alvin Cummins September 28, 2015 at 10:32 PM #

    @David,

    I feel vindicated, again. Another one bites the dust.

    Like

  14. Ticked off September 28, 2015 at 10:48 PM #

    Artax a hard seed BLP yard fowl throws his support behind Anthony King, Allan Fields and Cozier in the disgusting betrayal of Banks beer. Its individuals like Asstax that stand in the way of progress. If you don’t stand for something you will fall for anything. The scandalous corporate shenanigans of King’s vultures should not go unpunished. If the sale goes through a call must be made nationwide for the boycott of Banks products. Ian Desouza the Trini banker who presents an upbeat picture on Barbados with his pronouncements of optimism puts local business elites to shame and he is a foreigner. Were he at Banks the brew would remain part and parcel of the island’s national treasures.

    Like

  15. Artaxerxes September 28, 2015 at 11:23 PM #

    @ De Word

    Share dilution occurs when a company, in an attempt to raise revenue, issues new shares to new investors. When there is an increase in the amount of outstanding shares, existing investors will subsequently have a smaller (diluted) percentage of shares, thereby reducing their proportional ownership in that company.

    Supposed company has 10 shareholders, with each holding 1 share trading or 10% of the company. Assuming that each investor has voting rights, then every shareholder would have 10% control. If that company decides to issue 10 new shares and De Word purchases them, then you would now own 50% of the company.

    Bear in mind that these additional 10 new shares creates a situation whereby the company now has 20 outstanding shares, of which you own 50% of the company and the existing shareholders would now own 5% (i.e. 1 share of the 20 outstanding shares).

    Let’s put a money value to this scenario. Assume the original 10 shares in a company where listed as trading at $10 each. The additional issue of 10 shares would cause the other shareholders’ share value to be diluted (i.e. the stock would decrease to $5 per share).

    It is important to note that diluted earnings per share are calculated and recorded in a company’s financial statements. Potential investors use a company’s financial statements as a guide in determining if they will invest or not. The SEC also peruses these statements as well and would use the diluted share value reported therein for the stock exchange.

    If you apply the above scenario to my above comments, then it would be quite difficult for you to sell your share for “what you feel like” when it is listed in the financials at $5.

    Like

  16. Artaxerxes September 28, 2015 at 11:40 PM #

    Ticked off September 28, 2015 at 10:48 PM #

    The literacy rate in Barbados is said to be high, but surely a survey should be done to evaluate or determine the level of an individual’s comprehension skills and compare the results with literacy.

    WOW, by EXPLAINING an accounting process involved in the issue of shares relative to the pending takeover of BHL makes me “a hard seed BLP yard fowl (that) throws his support behind Anthony King, Allan Fields and Cozier in the disgusting betrayal of Banks beer, (and an) ass standing in the way of progress.”

    Do you care to point out to BU WHAT HAVE I MENTIONED IN ANY OF MY CONTRIBUTIONS THAT CAN BE INTERPRETED AS BEING SUPPORTIVE OF KING, FIELDS AND COZIER?

    Like

  17. millertheanunnaki September 29, 2015 at 12:19 AM #

    @ Ticked off September 28, 2015 at 10:48 PM
    “Ian Desouza the Trini banker who presents an upbeat picture on Barbados with his pronouncements of optimism puts local business elites to shame and he is a foreigner. Were he at Banks the brew would remain part and parcel of the island’s national treasures.”

    What a paradox, indeed!
    And, He Ian “God Almighty” DeSouza, is pontificating from the high altar at the Republic Bank- the national bank of Barbados, Exactly!

    If Bajans can sell their shares in BL&P, aka Emera, don’t you think they will sell their dead mothers in a blink of an eye far less any holdings in Banks the beer of Guyana?

    What national treasures you are talking about? You mean those fields and hills beyond recall that are now littered with plastic junk and rusting steel donkey carts made in Japan and Korea?

    Like

  18. David September 29, 2015 at 12:25 AM #

    Ticked off aka waiting etc.

    Like

  19. Artaxerxes September 29, 2015 at 12:37 AM #

    @ Ticked Off

    You typify the average individual who uses emotional rhetoric as a means to incite change rather than understanding the issues confronting you.

    You must come to the realization that you, the government, shareholders, Barbadians, me, the man pun the “Cream of Wheat” box or the emotional rhetorical shiite you gine spew on BU, will not stop the takeover. There are NO LAWS that will be able to stop it. Don’t blame me for that, it’s not my fault.

    Okay, we follow your call for Barbadians to boycott Banks Beer, then what? SLU is owned by an international beer company who will shut down the plant, lay-off workers and brew the beer in another country. As the new owners, they can use the product’s reputation as a marketing strategy.

    People like you definitely “tick me off.” You come with all of the emotional shiite and are hypocritical behind it.

    You claim you love Banks Beer so much, yet I have not seen ONE written protest from you relative to CBC, which is a government entity, using taxes to host “Q in the Community,” where the sponsor and beer of choice is the Trinidadian brew, STAG Beer. Not one word from you reminding this administration that they are “standing in the way of progress.”

    Have you labeled and accused David Seale as “its individuals like AssDavid that stand in the way of progress,” for importing Hairoun beer from St. Vincent and selling them at $24 PER CASE, which is significantly lower than the price of a case of Banks or Deputy?

    I have not seen ONE written protest from you admonishing those Barbadians who, rather than drink Banks Beer, prefer to drink Stag, Heineken, Hairoun and Piton beers;

    People like you refused to withdraw your from or boycott Republic Bank in protest of the sale of BNB;

    You have not withdrawn your support from shopping at Massey Stores in protest of the sale of B.S & T, and more so after Massey removed the indigenous names of DaCosta/Mannings, Knight’s Pharmacy and United Insurance forever from our landscape;

    Your supermarket baskets are filled with Trinidadian products;

    Have you stood in solidarity with Mark Dates who, while shopping at ACE H&B Hardware, was assaulted by a white manager Brian Hinds, by boycotting businesses owned by Ralph “Bizzy” Williams?

    “If YOU don’t stand for something you will fall for anything.”

    Wunnuh so does just come to run wunnuh mout and talk nuff, nuff shiite. Shiite bucket…..

    Liked by 1 person

  20. Artaxerxes September 29, 2015 at 12:44 AM #

    Well if “Ticked off” is actually “Waiting,” perhaps he could encourage Stuart to stop the deal before the ink on the signatures dries.

    Like

  21. de Ingrunt Word September 29, 2015 at 1:06 AM #

    @ Artax, it seems we are talking at cross purposes. Maybe you did not read my example which clearly delineated the basic same information you provided.

    For clarity sake I am fully cognizant of the finance terms.

    I am not talking about EPS. That obviously must change if additional shares are issued. And in the BHL situation that also fell deeply due to a precipitous reduction in the BHL income. Their earnings fell heavily from $22.8M in 2007 to $9.3M in 2011 and under $6M in later years.

    This is straightforward finance so there is no dispute about proportional dilution nor that shares ‘MAY/COULD/DO’ fall after a new issue due to lost of investor confidence as a result of the additional shares issued.

    However, practical SEC financial data also tells us that a new share issue in a stable or strong market may cause absolutely NO REDUCTION of the listed share price. That happens on stock exchanges regularly

    Thus your comments that ” …The additional issue of 10 shares would cause the other shareholders’ share value to be diluted (i.e. the stock would decrease to $5 per share).” are not perfectly accurate.

    That decrease will depend on the investor confidence in the company.

    Google offered an IPO of 19.6M shares @ $85. In 2005 there was a secondary issue of 14+M shares. A 50%+ dilution.

    On the day of the issuance the market closing price was $295 or a 2.6% downturn of their previous day $303 price.

    But to reinforce the power of how investor confidence and company specifics will ALWAYS affect price there was actually a 6% price increase when the news of the new stock issue was FIRST reported. And of course the closing share price was at a high premium for the original investors despite the proportional dilution. They suffered NO share price reduction.

    So your general technical analysis is well crafted but it’s absolutely bad form to make such a definitive statement that a stock price would decrease.

    Anyhow enough of this Finance 4000 analysis for those others who were interested. Suffice that BHL went through some serious earning reductions and the share private placement was technically good but yet could face a class action legal suit because of the implicit special classification given to the Latin Group.

    Thanks for the discussion.

    Like

  22. ac September 29, 2015 at 5:23 AM #

    Battle Royale Patiotism vs Big Business,/

    Like

  23. Atrue Freeman September 29, 2015 at 5:40 AM #

    The current value of BHL has everything to do with the present and future and nothing to do with the past.

    Like

  24. David September 29, 2015 at 5:43 AM #

    @Atrue Freeman

    Do you believe this deal was orchestrated?

    Like

  25. Atrue Freeman September 29, 2015 at 6:49 AM #

    If I were a major shareholder, with representation on the BHL board and the influence that goes with being a major shareholder, I would not allow the 2010 SLU deal to acquire 20% of BHL at $4 per share. And, with the improving outlook, I certainly would not sell my 20% interest to SLU at the same $4 per share in 2015. I am sure there is a logical explanation for the two transactions, however.

    Like

  26. David September 29, 2015 at 6:54 AM #

    Thanks, the question then is why did the Board seek that avenue to finance BHL.

    Like

  27. de Ingrunt Word September 29, 2015 at 7:26 AM #

    @Freeman, I accept that you do not like the SLU buyout offer but can you please give any analysis on why the deal is bad other than on patriotic sentiment?

    You said you would not sell at @ $4.00. OK.

    What do you mean by “improving outlook”? Does Banks have clear projections for beer sales improvements or improvements at PHD? Are they going to ink a deal to increase tetra pack juice and milk sales in US, Europe or region?

    Someone earlier made the observation of financial raiders who gobble up conglomerates like this and then sell off key parts at nice profits, reduce staff and laugh all the way to the bank with nary a care about the havoc they create. Is this your fear here?

    Someone else touched on the large beer merger which I noted in my first or second post on this subject and wondered if this play will result in a shuttering of the Banks factory and production started somewhere else. Is that your concern also?

    Just trying to get a feel for what is really going on as since that 2010 story from Hoyos there has obviously been no shareholders’ class action suit of the Board and their actions obviously continue apace.

    Like

  28. Bush Tea September 29, 2015 at 7:34 AM #

    @ David
    “…the question then is why did the Board seek that avenue to finance BHL.”
    +++++++++++++++++++++++++++++++++++++++++++++++++
    …you are 80% towards the answer when you look at WHO is the board…

    Like

  29. Artaxerxes September 29, 2015 at 7:53 AM #

    de Ingrunt Word September 29, 2015 at 1:06 AM #

    “Thus your comments that ” …The additional issue of 10 shares would cause the other shareholders’ share value to be diluted (i.e. the stock would decrease to $5 per share).” are not perfectly accurate.”

    You are CONFUSING the issue. A company issuing new shares through PRIVATE PLACEMENT is a COMPLETELY DIFFERENT PROCESS from that of a company issuing new shares through the stock market.

    When a public company issues new shares, the process is regulated by the SEC and require adherence to strict financial reporting criteria, which must be done on a regular basis.

    Issuing shares by private placement DOES NOT INVOLVE THE PLACING THE NEW SHARES ON THE STOCK MARKET. It is a PRIVATE TRANSACTION between the company and the potential investor. In simple terms it’s basically a risk the company takes in order to get some fast cash.

    Hence, your comment: “That decrease will depend on the investor confidence in the company,” is INCORRECT and your “Google” example is irrelevant within the context of this “discussion.”

    Like

  30. Artaxerxes September 29, 2015 at 7:54 AM #

    @ De Word

    I will give you another example from a MORE QUALIFIED SOURCE, and then perhaps you will understand.

    The following excerpt was taken from “Investopidia.” You could probably challenge them on their information:

    PRIVATE PLACEMENT IS AN ISSUE OF STOCK EITHER TO AN INDIVIDUAL PERSON OR CORPORATE ENTITY, OR TO A SMALL GROUP OF INVESTORS. Investors typically involved in private placement issues are either institutional investors, such as banks or pension funds, or high-net-worth individuals.

    If the company conducting a private placement is a private company, THEN THE PRIVATE PLACEMENT OFFERING HAS NO EFFECT ON SHARE PRICES BECAUSE THERE ARE NO PRE-EXISTING SHARES.

    WITH A PUBLICLY TRADED COMPANY, the percentage of equity ownership that existing shareholders have prior to the private placement is diluted by the secondary issuance of additional stock, since this increases the total number of shares outstanding. The extent of the dilution is proportionate to the size of the private placement offering.

    For example, if there were 1 million shares of a company’s stock outstanding prior to a private placement offering of 100,000 shares, then the private placement would result in existing shareholders having 10% less of an equity interest in the company.
    However, if the company offered an additional 1 million shares through the private placement, that would reduce the ownership percentage of existing shareholders by 50%.

    THE DILUTION OF SHARES COMMONLY LEADS TO A CORRESPONDING DECLINE IN SHARE PRICE, at least in the near term. The effect of a private placement offering on share price is similar to the effect of a company doing a stock split. The long-term effect on share price is much less certain and depends on how effectively the company employs the additional capital raised from the private placement.

    However, I’m not going to prolong the issue with you because it’s getting us nowhere. So, in “de Words” of the blog master: “you have the last word.”

    Like

  31. de Ingrunt Word September 29, 2015 at 9:42 AM #

    @Artax, you are the expert. I accept that. But why are you being so didactic and unnecessarily theoretical.

    Your last two posts highlight what I have said already and for some strange reason completely overlooks the most IMPORTANT aspect with any stock placement: the MARKET will be the final arbiter of stock price.

    My Google example spells out market effects on a SHARE issue. Period. Whether its a private placement or a public offer is IRRELEVANT.

    I stated and repeat the share price will NOT necessarily fall particularly if the stock market is robust and strong and the company enjoys strong investor confidence.

    For goodness sake when or how can a private placement invalidate or be superior to overall market conditions. NEVER,

    If you need me to tell you that you are right then ok. You are right.

    But for those who understand finance this is a circuitous debate. You are saying nothing different to what I am saying . But whereas I am returning to the bottom line you are being stultifyingly theoretical.

    Take for example from your source that “THE DILUTION OF SHARES COMMONLY LEADS TO A CORRESPONDING DECLINE IN SHARE PRICE, at least in the near term.” I have already shown that is not correct in all cases.

    Even more theoretical ” The effect of a private placement offering on share price is similar to the effect of a company doing a stock split.” I have already also give examples of that with my Artax Inc. and BU shareholder example.

    That is excellent theory that where a purchase of 10 new shares in a company with 10 original shares reduces early owners to a 50% loss (like a stock split as Investopedia says).

    But the original shareholder still retains his value in the company whether as one share worth now only 50% proportional value or as two shares if there was a stock split.

    Again I ask Artax is this not all subordinate to the overall stock market and investor confidence? Can’t a company with a stock split or a large secondary offer (private or public) not increase their price per share?

    Warren Buffets’ Berkshire Hathaway currently has a stock value of $193,000/share. One hundred and ninety-three thousand!

    All other things being equal, are you telling me that if he announced tomorrow that he wanted to get cash for a major investment in some new technology and was going to do a private placement of 3 million shares (for purposes of this example lets assume share issuance is currently 1M) or that he was going to do a 3-1 stock split that his share price would plummet to a third of its value?

    Rather the likely influx of potential buyers would blow that share price to a higher value (combined 3 shares) than the original!!!

    Artax, your theory is fine. But lets deal with the real situation. That is all I have been saying from the git go.

    Private placements are SUBORDINATE to the market they will not roil it in any greater way that other market moving actions.

    But as I said you are right so we are dun on this now I believe.

    Like

  32. Artaxerxes September 29, 2015 at 10:06 AM #

    @ De Word

    I’m not going to engage you any further on this matter.

    Like

  33. Artaxerxes September 29, 2015 at 10:11 AM #

    @ De Word

    Oh, yes, and I accept that you are CORRECT, since you are trained and qualified in this area and you do this for a living.

    Shiite……

    Like

  34. de Ingrunt Word September 29, 2015 at 11:00 AM #

    No prob Artax, I enjoyed the discourse. Took me right into my sweet spot.

    I’ll raise you a ‘call’ on that GHL private placement imbroglio and take up the ‘option’ at a later date. LOL.

    BTW, Berkshire has 2M shares issued. Looked it up afterwards.

    And here is my final ‘put’ option on the other finance debate.

    I really should have made the Berkshire example more realistic as they would never issue 3 million class-A voting shares whether private placement or otherwise based on their history. But I hope the point resonated

    Or then again I could have quoted what they DID so with their class-B shares back in 2010 rather than focus of that gargantuan class-A price to grab attention. So here it is:

    “Berkshire shareholders approved a 50-for-1 stock split of Berkshire’s Class B shares yesterday…The lower price is seen as an opening for small investors who couldn’t afford the old four-figure price tag…After the first thirty minutes, the Baby Bs are up 4.8 percent to $72.88 from the split-adjusted close of $69.50 ($3475 per share pre-split.)”

    Additionally at that time their Class-A shares also increased in value by a few % points.

    So can we agree to disagree based on the facts or will you still tell me that this is NOT a private placement and is therefore irrelevant too??

    A FIFTY-to-ONE pop or a 5,000% dilution and the share price INCREASED!

    Markets work on investor confidence and not theory always, Artax!

    That’s why they say life is sometimes stranger than fiction.

    Like

  35. Hants September 29, 2015 at 11:34 AM #

    Bottom line is Banks will be owned by Brazillians.

    The ownership of Barbados will be “diversified “.

    Maybe you should start teaching Portuguese and Chinese in primary school.

    Like

  36. Hants September 29, 2015 at 11:54 AM #

    What will happen to foreign owned Barbados companies when the owners do what they think is in the best interest of their investors,

    It might make sense to close Banks brewery and Pine Hill dairy and import Brazillian Beer and and Milk products. Now that is completely absurd thinking on my part.

    Then there is BL&P.

    http://thechronicleherald.ca/business/1313717-emera-completes-1.9-billion-debenture-sale-for-teco-deal

    Like

  37. Due Diligence September 29, 2015 at 12:38 PM #

    Hants

    You are correct that they should start teaching Portuguese and Chinese in primary school. And Spanish.

    I said in my post at September 28, 2015 at 3:16 PM

    “This could be good news, if Ambev SA, known as Inbev Participacoes Societarias SA leaves the manufacturing plant in Barbados and use their marketing might to increase the distribution to other untapped markets – like Sandals/Almond.”

    Look at how the tourist arrivals have increased since Butch opened Sandals.

    BUT; On the other hand, Ambev could move Banks manufacturing to a more cost effective plant in one of the Latin American jurisdiction where its has manufacturing plants.

    Like

  38. Hants September 29, 2015 at 1:08 PM #

    @ Due Dilligence,

    Ambev could also make a decision to close down Banks and get rid of the brand. More absurd thinking on my part.

    When you sell your ASSets you give up control and the new owners can do what ever they want.

    I am hoping that as Emera expands in North America they decide that BL&P is small potatoes and sell it back to Bajans. Just wishing and hoping.

    Like

  39. Bush Tea September 29, 2015 at 4:25 PM #

    @cHants
    I am hoping that as Emera expands in North America they decide that BL&P is small potatoes and sell it back to Bajans. Just wishing and hoping
    ++++++++++++++++++++++
    Sell? wuh boss, they have ALREADY skimmed off all the fat…

    Bushie is betting that at the appointed hour, they will GIVE it to Bajans ….to government that is…
    But by then it will be in a state of abandonment….
    … so we will have to spend millions to knock down the junk left behind
    … Borrow hundreds of millions to build um back
    .. and then BEG a kind hearted foreigner to take um and see if we can get some power.
    …. and of course provide 50 tax-free years in the process.

    Just like Almond….

    Like

  40. David September 29, 2015 at 4:33 PM #

    @Bush Tea

    Isn’t BL&P investing in a solar farm?

    Like

  41. Atrue Freeman September 29, 2015 at 7:45 PM #

    de Ingrunt Word September 29, 2015 at 7:26 AM # @Freeman, I accept that you do not like the SLU buyout offer but can you please give any analysis on why the deal is bad other than on patriotic sentiment?

    My positive sentiment is based upon publicly available information, including the financial reports and comments made by the CEO over time. Of course, different individuals may come away with differing feelings from the same information. And, at the very basic level, if we were to accept $4 as a fair price in 2010, I have observed nothing to suggest a decline in prospects for BHL to the extent necessary to negate the subsequently undistributed earnings.

    Like

  42. Colonel Buggy September 29, 2015 at 7:55 PM #

    And while Massy is peddling its ”Massy Card’ at every shop door, it has shown its yellow card to the employees of what we knew as Super Centre JB’s. Owen like he is right, even more people will find themselves on the breadline.

    Like

  43. Gabriel September 29, 2015 at 8:41 PM #

    John Simpson was a successful entrepreneur when he sold JB’s back when.Rumour has it that he signed an agreement with BS&T that he wouldn’t open another supermarket in under 10 years.He like buying and selling so he could take over JB’s again and re open a supermarket and train up a young black bajan to own it and run like how Sir Seale did with Bynoe.
    BTW I saw a strange name and a European looking man on TV tonight and he was listed as Chief Operating Officer of Cave Shepherd.I hope I am wrong but if I am right, the man can hardly speak English and his name looks hungarian or east european.You mean after 110 years or so that this local store can’t hire a native black man to call Chief Operating Officer.I voting with my feet and pocket accordingly.

    Like

  44. Atrue Freeman September 29, 2015 at 8:46 PM #

    There is also the possibility that SLU wants only its 40% for now, but is forced by law to make the offer to take over BHL. If this is so, the $4 offer may succeed.

    Like

  45. Bush Tea September 29, 2015 at 9:18 PM #

    @ David

    Isn’t BL&P investing in a solar farm?
    ++++++++++++++++++++++++++++++
    Boss… is it not passing strange that all along BL&P had nothing good to say about Solar energy until BAJAN small companies (and Bizzy) started to show how easy and viable it is…?
    Suddenly they had quotas and limits and all kinds of reasons why the FEAR trading Jokers should limit these new businesses…

    All of a sudden, the lotta Solar is no longer a problem and we hear that BL&P will now invest large scale…in solar.

    If the electricity generation future of Barbados is to be Solar based, what is it that says that BL&P and not individual Bajans are the ones to have this market reserved for themselves?

    That monopolistic shiite only made sense in the days of centralised generation. Emera therefore now has a catch 22 problem where they either need to invest in traditional generators for the near future (at great expense and risk) or admit that the future is one of RE and solar …and face the challenge of competing with individual owners of solar systems.

    They will fall victim to changing technology very shortly….

    Like

  46. Bush Tea September 29, 2015 at 9:46 PM #

    On the question of National Assets being auctioned off…. it is quite amazing that so many people fall for the hype…
    There are some things that SHOULD NOT BE FOR SALE…… as a matter of personal/national pride.

    One does not sell one’s children…
    One does not sell one’s principles
    One does not sell off one’s birthrights

    Why should a few individuals who happen to be in position to exercise control on such vital national assets be allowed to place them forever out of the hands of our future citizens – EVEN IF MAKING A PROFIT IN THE PROCESS?

    What gives these trustees the right to FOREVER condemn our children to be servants to these foreign owners – back into the position of depending on their favour just like our forefathers were in slavery..?

    There ARE some things which we make for sale …..these are PRODUCTS…such as rum, sugar, tourism, etc. THESE are what we should be selling…

    ONLY A JACKASS would sell off the only 166 square miles we can EVER have …to strangers for a little shiite profit…

    Only a jackass sells off his children’s only home to strangers – and force them to have to rent from the new owners at whatever rates set… or their only POWER COMPANY and then have to pay through the nose for power…

    …or the ONLY national bank; The supermarkets; the damn hotels; and now even the beer…

    What the hell could be more obvious….?
    …and we have jokers talking shiite about how such transactions are ‘common’, are ‘legal’; are ‘normal business’……what they ‘are’…. is alotta shiite.

    Like

  47. Alvin Cummins September 29, 2015 at 10:29 PM #

    @Bushie,
    Isn’t BHL (formerly part of BS&T) owned by Massey? Don’t they make the decisions”

    Like

  48. Bush Tea September 29, 2015 at 10:58 PM #

    Buzz off Alvin….go and deal with AC and Clare..

    Bushie is talking about NATIONAL level decision-making that is built on a VISION of who we are as a people; where we have come from; and where we wish to go….
    ….not about leaving such critical issues up to JAs like you and your bribe-taking associates…

    Instead of depending on investments in ‘education’ to inform bowls about the danger and folly of selling off their own vital asses …oops assets… to the highest bidder, Dipper should have written it into the constitution …instead of the damn public order act…

    That way, despots like Fields et al would have had to find OTHER schemes, than selling off our young people into slavery, to raise his pieces of silver….and false knighthood..

    …and Bushie won’t have had to respond to complete brass bowls suggesting that the deal is OK because “it was made by foreigners anyway”…. ‘wh get to make the decisions…’

    JA… that is the point exactly…. shiite man!!!
    Steupssss

    Like

  49. TheObserve September 30, 2015 at 6:55 PM #

    @DIW
    You lost me completely. Please explain some more. It seems to me as if you are creating money from nowhere. 10 shares at $10.00 give the company a worth of $100.00. Creating 10 additional share will not make the company worth $200.oo. Instead each share will now be worth $5.00.

    Help…..

    Like

  50. de Ingrunt Word September 30, 2015 at 7:52 PM #

    @Observer, I denominated in % to make the point that overall equity share ownership of a company would fall from 50% to 25% for the original two sets ( 5 + 5 individual shares) of shareholders with the issuance of 10 more shares.

    The actual value of the company was not discussed but you are intuitively making a calculation it seems with the $200 value.

    But as you state increased share issuance does not inflate the value of the company so that was not being suggested.

    The entire palaver was about dilution and the impact of a secondary share issue (whether private placement or public stock exchange issued).

    Like

  51. Hants September 30, 2015 at 7:59 PM #

    What happened to all the cash these Bajans acquired from the sale of companies like BS&T ?

    Did the Trinidadian owners pay the cash into Barbados Bank accounts or did the money drift away.

    I keep hearing about White ownership of businesses in Barbados selling them to foreigners but did the whites leave Barbados and take the money with them ?

    Like

  52. David October 1, 2015 at 11:39 AM #

    Noted, will update in next rotation.

    Like

  53. Gabriel October 1, 2015 at 9:01 PM #

    The only difference as compared to the old,outspoken slavery is that the employee of today appears to be free in that he is not sold once for all but piecemeal by the day,the week,the year,and one owner sell him to another being the slave of no particular person but of the whole property owning class……..with apologies to Engels

    Like

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