Pan Jam favours RBC acquisition

Wednesday, March 12, 2014    

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THE Pan Jamaica Investment Trust (Pan Jam) group led by the Facey family favours the proposed $9 billion acquisition of loss-making RBC Bank Jamaica. Up to now, Pan Jam publicly remained silent on the proposal by its associated company Sagicor Group Jamaica (SGJ) to acquire RBC.

“We are excited both by Sagicor’s contemplated acquisition of Royal Bank of Canada’s Jamaican operations, and by our own Marriott Courtyard development as well as other Jamaican investments we have in the pipeline,” Pan Jam Directors Paul and Stephen Facey in a joint statement accompanying the financials explained.

“2014 promises to be an exciting and important year for us.” The directors added that the Marriott Courtyard should finish construction in mid 2015.

Pan Jam which owns the largest block of local shares in SGJ at one-third did not disclose the possible impact of the acquisition on the group. SGJ and RBC the nation’s third largest bank started sale negotiations last November and SGJ closed the deal subject to government approval in January.

Royal Bank of Canada in January announced that it would take a CAD$60 million ($5.9 billion) loss on the sale of its Jamaican operations to SGJ.

The sale price of some $9 billion will closely reflect the book value of RBC Jamaica’s operations. The local RBC operations recorded over $9 billion in losses over the past four-anda- half years mainly due to bad debts.

The lack of profitability prompted RBC Jamaica’s parent to inject close to $5 billion into it in exchange for new ordinary and preference shares since December 2011.

The bank since last May closed four of its branches, leaving 13 open, and cut its workforce by 10 per cent. RBC Jamaica had $32.1 billion in loans on its books up to the end of last September.

Pan Jam group made $2.4 billion for its year ending December 31, 2013, or 19 per cent higher year-on-year based on acquiring a larger stake in Sagicor. Specifically, the group’s stakeholding in joint ventures and associated companies earned $2.1 billion or nearly $470 million more than a year earlier.

Its associated holdings include a 32.8 per cent stake in Sagicor Life Jamaica, a 50 per cent stake in Mavis Bank Coffee Factory, 38 per cent holding in Caribe Hospitality (Marriott Courtyard hotel), 20 per cent stake in Chukka Adventures, 20 per cent stake in Hardware and Lumber Limited (H&L) and a 25 per cent interest in the new Walkerswood group.

“Sagicor’s results were driven by strong revenue growth resulting from new business across all lines, which helped to offset the effects of the National Debt Exchange consummated in 2013.

As noted earlier, we acquired an additional 300 million Sagicor shares in July, 2012, representing eight per cent of the company,” stated the financials. The group earned $6 million from its stake in Mavis Bank, the country’s largest processor of Jamaica Blue Mountain coffee.

In May 2012, Pan Jam acquired a 20 per cent share of Chukka Caribbean Adventures Limited, an adventure tours company operating in three countries for some US$4 million.

“While our share of results to date has been modest, we are confident that this will become an important component of our investment portfolio in the future,” stated the financials on Chukka. Property income increased 14 per cent to $1.4 billion and a $253 million property revaluation gain.

Pan Jam reports that properties under its management had overall occupancy in excess of 95 per cent for the year





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