Banks share block
Shareholders of Banks Holdings Limited (BHL) have been summoned today to a special meeting to approve a resolution that could prevent the issue of any new shares in the local conglomerate.
Foreign financier Latin Capital Fund is funding construction of BHL’s new $50 million state-of-the-art brewery at Newton, Christ Church.
And as part of that agreement signed last year, Latin Capital Fund immediately had the $53 million loan converted into 13.25 million BHL shares.
That move resulted in the financier owning 20 per cent of the local conglomerate that also owns and operates Barbados Bottling Company Ltd, Pine Hill Dairy and Banks Brewery.
However, some shareholders told BARBADOS BUSINESS AUTHORITY they were “nervous” about the resolution which, if approved, could bar the issue of any new shares in BHL without the Latin Capital Fund’s expressed permission.
They were also concerned that having already diluted their shareholding with the issue of 13.25 million additional shares last year, Latin Capital Fund was now seeking to protect itself from dilution of its share interest by stopping BHL from issuing new stocks.
According to the resolution: “Until such time as Latin Capital Fund or any affiliate thereof shall cease to hold shares and/or notes convertible into shares in Banks Holdings Limited there shall be no change made to the number of issued shares in Banks Holdings Limited except with the written consent of Latin Capital Fund.”
Asked whether the move was in the best interest of the foreign financier or local shareholders, BHL’s managing director Richard Cozier said the resolution, while it protected a particular shareholder from dilution of its shareholding, could also be viewed as providing some protection for shareholders as a whole.
“Holistically speaking, if the company can’t issue new shares, then the shareholding of all the shareholders, generally, can’t be diluted,” he pointed out.
When BHL first entered the agreement it was heavily criticised by Doug Skeete, interim president of the Barbados Association of Corporate Shareholders for only seeking the permission of a few large shareholders and not putting the matter before a general shareholders meeting.
In addition, Skeete warned BHL that it left itself vulnerable to takeover by entering the debt conversion agreement.