FINANCIAL Sector Adjustment Company (Finsac) Limited was able to enter an agreement last Thursday to dispose of its interest in Ciboney Group Limited which has lingered on its balance sheet after taking over its previous parent, the former Crown Eagle Life Insurance Company Limited, in late 1997.

An initial release on the Jamaica Stock Exchange (JSE) noted that the transaction was completed on June 29 and that Ciboney shares held by five affiliated entities were transferred to IEC Energy Company Limited, the wholly owned subsidiary and nominee company of Wiltshire Consulting and Advisory Limited. However, a subsequent update an hour later noted that the Ciboney shares were sold under an agreement to Wiltshire, with 393,732,417 shares or 72.1122 per cent of Ciboney to be transferred to IEC Energy.

IEC Energy is a St Lucian international business company (IBC) formed on May 3, with its registered agent being ADCO Incorporated.

Innovative Energy Company Limited is also a St Lucian IBC with the same registered agent, and was formed in April 2011.

When the Jamaica Observer reached out to Wiltshire’s founder and Managing Director Wayne Wray via e-mail for comment, he responded: “As we are still going through the regulatory process, including the takeover bidding procedures, I am not in a position to discuss the matter at this time.”

An additional release posted on Monday by Ciboney stated: “The board wishes to confirm that it has received notice of a firm intention by IEC to make an offer to acquire all the shares held by minority shareholders in the company. IEC has indicated its intention to publish a takeover bid circular (TOBC) within 30 days of June 29, 2023, as required by the Securities (Takeovers and Mergers) Regulations, (the Regulations) and the take-over and mergers rules of the Jamaica Stock Exchange Rules (the Code).”

As a result, the company will only handle communication through the stipulated methods under the regulatory process.

The takover bid occurs under the JSE’s Main Market Rule Book, Appendix 1, Section 19 which stipulates that a mandatory offer must be made to other shareholders of the same class once any person acquires shares which carry more than 50 per cent of the voting rights or control of a company.

Due to this takeover bid, remaining Ciboney shareholders won’t immediately know the price IEC has offered to acquire Finsac’s stake, but it will give them an opportunity to dispose of their Ciboney shares if they accept IEC’s offer price when the takeover circular is published. Ciboney’s board will be required to prepare a director’s circular in response to the takeover circular, with this process to be overseen by a special committee of independent directors.

Ciboney Chairman Errol Campbell and directors Michael Campbell, Tricia Grant Mitchell, and Geoffrey Messado resigned on June 29, with Nigel Davy appointed as the new chairman and Jennifer Davy, Kyle Davy, Whycliffe “Dave” Cameron, Conley Salmon, Donald Patterson, and Wayne Wray appointed as directors. Nigel, Jennifer, and Kyle Davy are listed directors and executives of Innovative Energy Company DBA IEC SPEI Limited; Cameron is the former president of the West Indies Cricket Board; and Salmon and Patterson are retired executives of Jamaica Broilers Group Limited.

Nigel Davy is a director of Wigton WindFarm Limited, which entered into three joint venture arrangements with Innovative Energy Company DBA IEC SPEI Limited in April 2022 valued at more than $1.1 billion or US$7.33 million. Davy owns half of IEC SPEI according to Companies Office of Jamaica records.

Recapitalising Ciboney

Although this deal gives Ciboney new life, the company is going to need fresh capital to begin whichever new business model it decides to pursue. Ciboney’s unaudited financials for its May 2023 financial year revealed that Ciboney only had $63,000 in cash and $10.77 million in current liabilities. This comes after the company’s fourth-quarter net loss tripled to $1.67 million, incurring a net loss of $3.72 million for the full year.

Ciboney sold its hotels and villas in the early 2000s before disposing of its final property in Culloden, Westmoreland, in December 2017 for $226.27 million. A capital distribution of $185.64 million was paid out to its shareholders in March 2018, with the amounts owed to Finsac settled. Ciboney listed on the JSE on January 25, 1993.

While this would seem like a deterrent for some, Ciboney’s share price jumped 30 per cent on Friday, from $0.67 to $0.87, with 987,355 shares changing hands over 23 trades. Monday was no different as the stock halted up at open to $1.16 and closed the day at $1.17, a third higher than the opening price. The best bid was $1.18, and best ask of $1.29 at the end of Monday when Ciboney had a market capitalisation of $638.82 million.

Ciboney had an extraordinary price run up in early 2021 when it had a peak intra-day price of $2.30 on February 25 before having a massive drawdown to $0.20 by March 12. There was another price run in June 2022 when there was a confirmed buyer for Ciboney which saw the price peaking at $1.82 on June 24, before another drawdown to $0.63 on July 1.

The last two takeover bids to occur on the JSE were for SSL Venture Capital Limited (SSLVC) by MFS Acquisition Limited for $0.0948 per share in May 2022 and the acquisition of the controlling interest in Key Insurance Company Limited by GraceKennedy Limited for $2.01 per share in March 2020. SSLVC has since been renamed MFS Capital Partners Limited while Key Insurance received an equity injection of $668 million in January 2021. The MFS deal was organised by Dino Hinds, who was a former executive of First Global Bank Limited like Wray. AspireSec Limited, which is operated by attorney-at-law Marc Ramsay, replaced Sharon Burke on June 29.