Ahead of the shareholders meeting to be held in Trinidad in two weeks time, RBTT Financial Holdings began distributing circulars fully detailing the sale agreement with Royal Bank of Canada, that will see the Canadian bank, should it have its way, grab up all the shares in RBTT for approximately TT$13.8 billion (US$2.2 billion, J$155 billion).

The agreement signed, last September, is asking RBTT shareholders to part with their shares for a cash amount of TT$24 per share, which at J$11.1 to TT$1 translates into J$266 per share, and a number of RBC shares determined by a collar mechanism.

The share conversion is subject to a plus or minus 10 per cent "collar" based on an RBC share price of US$54.42 (J$3,809.40) - the average trading price for the five days ending September 28.

In other words, if the average trading price of RBC common shares on the New York Stock Exchange (NYSE) for the five consecutive trading days up to two trading days before the transaction is closed falls between US$48.98 and US$59.86 a share, then that price will be used as the specified price for determining the exchange ratio.

But RBC share price, which shot above US$58 share has been trading at below the lower collar price since the beginning of March, reflecting what local analysts say have nothing to do with the Canadian bank's fundamentals and more to do with pressure on the banking sector caused by the sup-prime mortgage fallout in the US market.

To shareholders, however, the number of shares transferred for each RBTT share capped at the lower end, or 0.5173 RBC shares per RBTT share. The value, however, would be determined by multiplying that amount by the average share price, which stood below US$47 per RBC share up to yesterday.

But that would only place the value of the shares at TT$15.34 per share if it were to stay at that price by the time the transaction is completed.

RBTT directors are expecting to conclude the deal by June.

Overall the transaction would still translate into over TT$39 per RBTT, higher than the TT$34.01 it traded for on the Trinidad and Tobago Stock Exchange (TTSE) yesterday and the TT$36.50 high it shot to in the first week of October last year on news that the cash rich Canadian bank was buying out the Trinidadian bank.
RBTT stock last traded at J$400 on the Jamaica Stock Exchange (JSE).

Vivian Bedassie, executive wealth manager at NCB Capital Markets, believe, shareholders should hold a longer term view of the transaction.

"I think a person will want to look at it like that down the road instead of just saying that the price has fallen over there so maybe its not a good deal," said Bedassie. "The question is, how long will it continue to fall over there? The North American market is being affected because of (macro-economic issues) that is going on over there."

Indeed, yesterday on news that the Federal Reserve was going to pump US$200 billion into the financial sector led to a rally on bank stocks on Wall Street, including RBC, which saw its share price move from US$46.40 to US$47.39 a share during the course of the day.

Investors may well prefer to see RBC share price stay down, however, because it represents a higher number of RBC shares for each RBTT stock unit.

Should the share price of the Canadian bank reach the higher collar price, RBTT shareholders only get 0.04232 RBC shares per RBTT stock unit.

Alexander James, a stockbroker at First Global Financial Services, echoed the view that "the RBTT sale brings a lot more diversity into the market".

"RBTT is easily has the third strongest banking network in Jamaica and with a parent company that has deep pockets as RBC, all you can see is expansion and them capitalising on the strengths that they currently have," James told the Business Observer.

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