Cayman National sells off 54% of stock
Republic Bank
(CNS): The Republic Bank of Trinidad and Tobago (Barbados) Ltd has bought a majority share in Cayman National Corporation just over two months after it made an unsolicited offer. An announcement from Republic said that at the end of business on Friday it had received notice from Cayman National that shareholders were willing to sell more than 54% of the bank which at $6.25 per share amounts to more than $140 million. However, an announcement from Cayman National revealed another special meeting on 7 November to make a further amendment to the bank’s articles to complete the transaction because of an “administrative oversight”.
Before Republic can take over, Cayman National needs to address the bank’s current limit on share transfers, which was not dealt with during the last extraordinary meeting. The shareholders are being asked to vote for an amendment to the Cayman National Articles of Association limiting the number of shares that can be acquired by way of share transfer.
Subject to the regulatory approvals and this administrative change, Republic has now acquired control of the bank and is still seeking to buy up to 74.99% of the ordinary shares, and shareholders who have not yet agreed to sell have until 5pm Monday to sell.
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The current president of CNC told shareholders that Republic had indicated it planned to leave things, such as staff and the board at the bank, as they are for a while, as it is a very profitable business, in order to get a return on their investment. They also stated in notices that the bank’s name will not be changed for at least the next five years.
But as the majority shareholder, Republic is now in control and will be able to act in its own interests including, if it acquires the remaining 20% shares it wants, merging or selling the institution and forcing minority shareholders to sell.
Although a majority of shareholders have voted in favour of the sale, the deal has continued to cause controversy, with the Flowers family, still a significant shareholder, not supporting the take-over and many smaller shareholders making it clear they want the bank to remain in local hands. Cayman National was the last locally owned retail bank.
One shareholder of Cayman National Corporation, who has asked to remain anonymous, claims that the deal can still be stopped if shareholders vote against the amendment to the Cayman National Articles of Association at the meeting next month. To do this, he said, small shareholders must withdraw their proxy vote from the board.
He also wants a vote of no confidence in the board because, he claims, with the exception of Clarence Flowers, they don’t know what they are doing, and he is also urging the government and CIMA to stop the sale of the bank to Republic because it will harm the reputation of the Cayman Islands.
The CNC shareholder said that CLICO Investment Fund (CIF) is a major shareholder in the bank and the Trinidad and Tobago government is a major shareholder in CLICO, which would give an OECD blacklisted government a foothold in the Cayman Islands. The government, he said, should do its due diligence and find out exactly who owns shares in Republic and also in CLICO.
He said that Trinidad has a major problem with their foreign exchange, and buying into CNC would be a way to circumvent their own failed national monetary policy. However, he claims that this could be catastrophic for Cayman because the US Securities and Exchange Commission (SEC) and the European regulators could shut down the SWIFT and correspondent banks.
The premier and the Cayman Islands Monetary Authority should look into this situation and not approve the sale, the shareholder said, because of the danger it would bring to this country, especially when they are in the middle of negotiations with Brussels and in the process of assuring Washington, DC and London that Cayman is an open and trustworthy jurisdiction.
He said that this deal is also not good for the majority of shareholders, who have been blindsided by the board and will regret it if this deal goes through. He said the shares are kept artificially low by only listing the bank on the Cayman Islands Stock Exchange and would be worth much more if the bank was listed on an international stock exchange.
“The directors have not fulfilled their responsibility to maximise the share price,” he said, but added that he does not doubt their honesty or integrity but believes that they do not know how to run a business.
The sale is also not good for bank staff, he said. The directors have argued that the alternative to selling to Republic is consolidation with another bank, which will lead to staff loss. However, although the deal stipulates that the fundamental operation of the bank will remain in place for five years, he said that this is no time at all in the life of the bank and will ultimately result in downsizing of local staff.
“There is always a caveat to a caveat,” he said, indicating that Republic will find a way around this agreement anyway to lay off staff.
Meanwhile, some of the directors, who are selling most of their shares but retaining enough to keep their seat on the board, will continue to earn fees as directors with the option to acquire more, he said.
The shareholder said that before the upcoming extraordinary general meeting on 7 November, all shareholders should withdraw their proxy vote and use it to stop this sale by voting no to the amendment, and then vote in a new board.
He is suggesting that they all meet before the 7 November EGM to discuss the situation. Before this, the board should give each shareholder a copy of the Articles of Association and a copy of the side agreement concerning the governing of the bank over the next five years.
Category: Banking & money, Business
Read… Then decide… Google “Clico trinidad scandal” If this can be stopped make it so!!!
Founding Members of CNB; warning do not sell your shares you will have sellers remorse within the next year the stock price will be at least double and you will be double rich as today. CNB has GOD, great staff and management, but a inexperienced board of directors. Look at the P/E vs CNB; CWCO, NTB, CUC. CNB stock is undervalued because no one knows on the open market that the bank exists. The valuators are wrong. US$150 million by Christmas or $300 million by next Christmas. Keep CNB Caymanian the stock will blossom without foreign ownership. Butterfield doubled in 12 months with a P/E of 20. CNB P/E is 5. Do the math, CNB is undervalued because it is unbeknown in the open market. Case in point the bank just lifted to 10% ownership restriction thus there will be more demand and buyers for the stock.
What the hell is that headline? Cayman National hasn’t sold anything
So sad. There’s a plaque at the main branch and it clearly states it was the founder Peter Tompkins wish to form the bank for the people of the Cayman Islands and for Caymanians to be the beneficiary of this company. Sad.
Best Cayman become part of Trinidad
Swapping Jeff Webb for Jack Warner . Proud of that.?
Please people, let’s come together and vote against these changes. This article explains everything very well, laying out many of the adverse outcomes of selling CN to a Trinidadian Bank.
Change is good, but we must do our research on this move and take heed of the advice shared here. Our government and the rich are selling EVERYTHING that we could once truly call and consider Caymanian to foreigners (Dart and now the T&T)… What do we have left?
We can make Cayman National an ever better company. As a start, let’s choose a Caymanian CEO and once again make it count for OUR people.
Let’s vote to change the Board, as they are the ones looking to sell the company… and let’s get something clear here, this offer was SOLICITED! This all goes further back than June 2018 when this was made public.
How on earth can you folks who have risked absolutely nothing for the past 40+ years now demand that those of us that did invest, cannot benifit from said investment
They do this all the time, be it people or things. They hate on you until you become famous and then all of a sudden you belong to them now. When before they wouldn’t touch you with a ten foot pole.
Which would you prefer: short-term gain vs long-term gain? Think.
Exactly. This is the first time in my recollection that my few couple thousand shares has risen in value much above what I paid for them. WE invested in the bank, and in doing so invested in our country.
Now we are rogues for wanting to realise a return?
Now you are investing in Trinidad..or are you saying Trinidad is your country?
Obviously not Dufus.
How do you conclude that the complainers are not shareholders or the earliest shareholders? CNC traded at a PE of 5 on a market that, for the last *year* traded only 600,000 shares? Totally illiquid — zero premium there. Meanwhile every other bank here trades at PE of 13+. So an offer comes in for PE of 10 and the directors can only urge that everyone should cut and run without even trying to solicit a better offer or even to consider listing the shares in a liquid market where the PE would be much higher and a takeover would command a premium on that? Shortsighted. Whoever CNS interviewed is correct. The deal makes no sense, and the directors have failed to expose this, supposedly because they aren’t “allowed to”. Unbelievable. SO who runs the company then, the directors? Nope! An accountant’s report that says the price is good enough. Under those rules, one accountant alone has overridden every one of the directors, and this in turn has misled (and even scared) many shareholders out of their positions. It’s terrible what is happening here.
Ref Anonymous 17/10/2018 @3.pm.
While you have a good point about the listing on an exchange that provides liquidity, there a financial considerations such as capitalization ($200 million) and earnings per share and book value of the shares. There are a lot of other cost such as personnel that would have to be considered. A company listed on a large stock exchange has to be able to meet excessive financial scrutiny. I am not sure that CNC would qualify for listing and if it did, CNC shares may actually trade for much less than their peers. CNC has about $120 million in capital and it may take several years to be in a position to list on a suitable exchange, which in my opinion would be NYSE. Give the directors their due, they did what they were obligated to do. If shareholders do not want to sell, they do not have to.
Stop the sale now..I bet China has shares in Republic….this will be worse than building the cruise birthing.
I feel let down by the directors. It’s all about the money – as if any of them need it! Cayman is down the drain.
100% in agreement with this heartfelt comment.
Fact is Trinidad owns more than half of Republics parent.
Cayman National was a prime plus one lender (for mortgages anyway) one of the only, if not the only bank on the island which did that. All those who rushed to sell out should be bracing for a rate hike announcement, in some time of course to bring the banks lending rates up to par with the rest of the banks on island (prime plus 2). The Republic bank will of course be looking to recoup the money spent in the take over and make a tidy profit for its own stakeholders. Thank goodness I took out my mortgage elsewhere. Sell out ppl fell for the tricks, good job to all involved , enjoy the increased rates to come.
I have a prime plus less than one percent mortgage with another large lender in Cayman (dont want to say the name, “But..” they are in the “field” of lending).
I have same rate at a competitor bank, and there is another bank offering those terms, without medical insurance, 30 year term, and absurdly low down payments…not sure how they are doing that, but they are the most aggressive repo foreclosure outfit on island.
those are usually promotions, whereas CNB rate is set at prime plus one. Anyway, too late for them now.
ho ho ho and a bottle of rum! ye ol blackbeard…lets scourge them up and head to the republic! lol????????
other countries know “Cayman is easy pickings!” little consumer protection here …and the list goes on and on…
That’s true, we are selling everything that was truly Caymanian.
And we have no choice on Cayman Brac.
Welcome Jack Warner, you’ll assimilate well.
I’m probably another grain of sand at the beach, but you can bet my money won’t be in CNB much longer.. or should we start saying Republic Bank T&T (Cayman).
The administrative error does not speak well of either sides competence.
Exactly, they’re so eager to sell their shares that EVERYBODY missed that. Not very good on the part of both of their legal representatives.
The party at Truman’s house tonight, yo.
Free thongs for everyone!
Put the chicken in the pot and move on.
CNB’s goose that laid the golden egg done cooked!