Shareholders of 1834 Investments Limited voted in favour of the scheme of arrangement of Radio Jamaica Limited (RJL) at the hybrid, court-ordered meeting of shareholders held last Wednesday at 7 North Street.

Apart from one shareholder who voted against the resolution, 99.02 per cent of the shareholders present at the meeting voted in favour, which represented 99.85 per cent of the votes cast on the resolution. As a result, 1834 will now return to the commercial division of the Supreme Court of Jamaica to have the scheme sanctioned. The circular outlined a timeline of November 24 or earlier if a date is obtained before then.

Under the current proposal, 1834 shareholders can elect to receive $1.29 in cash per share, 0.4962 RJL shares per 1834 share or a combination of cash and shares. The effective date for shareholders will be December 1 with the cash payment expected to be completed by December 8 and the RJL shares by December 15. If an 1834 shareholder doesn’t make an election on any option, they will have been deemed to elect the cash consideration. Once the scheme is completed, all of 1834’s assets and liabilities will be merged RJL while 1834 will be struck off the Companies Office of Jamaica register. RJL trades under the RJR ticker on the Jamaica Stock Exchange which will result in RJL being delisted.

“I can tell you that our full board of directors is in full support of the scheme. I don’t only speak for the committee of the independent directors, but I speak for the full board. We endorse the fairness opinion given to us by Ernst and Young,” said Monica Ladd, who was the court-appointed chairperson of the meeting.

Ladd is the widow of the company’s former chairman Oliver Clarke, whose 65,317,720 shares in 1834 were transferred to her in August 2021. This represents a 5.39 per cent stake in the business. Other members of the committee of independent directors include 1834 general manager Terry Peyrefitte, Morin Seymour and Earl Jarrett.

Ladd confirmed that of the nine shareholders who signed the lockup agreement totalling 634,303,961 shares or 52.37 per cent of the company, one or two have opted for cash while the remainder have chosen the RJL shares.

When asked by a minority shareholder about his concerns with the transaction, Ladd replied, “The interest of the minority shareholder in this case is the same exact interest as anyone else. The problem is really that 1834 is not a great investment and has not been a great investment.”

She continued, “The answer to that is we don’t actually have a business. We could go out and start a new life as a real estate investment company, but we don’t think that’s the best use of the funds. Since the 2016 merger, 1834 was effectively left with real estate and some arms, but without a business purpose. Under the circumstances, we’re actually selling real estate, the bonds represent a good solid investment, but they don’t represent a business purpose. Therefore, they don’t give people a business to invest in.”

1834’s asset base has shrunk from March 2016 at $2.17 billion to $1.80 billion as of June 30 while shareholders equity has also declined from $1.81 billion to $1.47 billion over the same time frame. 1834 was formerly The Gleaner Company Limited before it transferred its media assets to RJL Limited in a March 2016 merger.

In making the case for accepting RJL shares, Ladd added, “The [1834] share price has been significantly less than the actual value. If you took the company and sold off its assets, you would get more than the share price. The share price is significantly depressed and that’s because of the factors that I outlined. What that really means is that the value of your investment has not increased, you have not been paid dividends for several years and the value of the company in the long run is declining in real terms. By going into RJL as an investment, we think you will have business opportunities that will result in your share price increasing and likely to have dividends.”

RJL had published a news release concerning the scheme of arrangement for amalgamation on August 8 which has since been deleted from the JSE. RJL entered into a “cash back-stop” agreement with Victoria Mutual Investments Limited (VMIL) which will pay up to $700 million in equivalent value to 1834 shareholders who selected the cash payment option. This funding came from the VMIL being repaid a bridge loan from Kingston Properties Limited in June. Chief Executive Officer Gary Allen confirmed to the Jamaica Observer last week that RJL is only exposed to paying just under four per cent or $63 million in value of 1834 shares.

RJL recently declared a dividend of $0.02 to be paid on September 26 to shareholders on record as of September 2. This payment totals $48.45 million. 1834 has not paid a dividend since December 2020 when it paid $0.04 per share or $48.45 million. 1834’s stock price is up 63 per cent year to date to $1.15 while RJR’s price is down 22 per cent year to date to $2.40.

1834 recorded a $29.71 million loss in its first quarter ended June 30 compared to a net profit of $14.85 million in the prior period. 1834 had cash and cash equivalents of $215.88 million.

“We believe that the shareholders will substantially benefit. I think what we’re effectively doing is deploying these investments now into a business that we hope we will all join and that RJL has use of that money in its business purpose. After this merger, RJL will be stronger than it is now, and it will have more resources to put towards its business and its technological development. We believe it will produce better dividends to you than 1834,” Ladd closed.