Simply Secure Limited has launched its takeover bid for the remaining 30.92 per cent of tTech Limited which it has valued at $79.10 million (US$459,912.27) based on the $2.20 takeover price offered to the remaining shareholders.

Simply Secure had previously acquired 73,229,223 ordinary shares of tTech on July 11 and November 15 at $2.20 from tTech directors Edward “Teddy” Alexander, Enqueue Inc, a St Lucian IBC holding company owned by Norman Abraham Chen, and Auctus Holdings Inc, a St Lucian IBC holding company owned by Gordon Christopher Reckord for a total $160.374,640 (US$1,015,067.73). That brought its total ownership to 69.08 per cent and triggered the mandatory takeover bid required under the Jamaica Stock Exchange (JSE) rules and Jamaican Securities Act.

Simply Secure’s offer was launched on Friday at 9 am with the majority shareholder having financing from First Global Bank Limited (FGB) to pay shareholders for the entire offer. Unlike other takeover offers, Simply Secure intends to pay for any shareholder’s expenses including the JSE cess, brokerage commission and general consumption tax should they accept the offer. The offer is scheduled to close on January 6 at 4pm with GK Capital Management Limited being the lead broker for the offer. Simply Secure is a St. Lucian IBC with its principals being Jamaican Kevin Gordon and New Zealander Rob Mayo-Smith who also sit on tTech’s board with Gordon being tTech’s new chief executive officer while Mayo-Smith is tTech’s chief operating officer. Both Gordon and Mayo-Smith also run managed security services provider Simply Secure LLC, which is based in Fort Lauderdale, Florida, with the same positions as seen with tTech.

“As previously stated, the offeror [Simply Secure Limited] is an affiliate of the Simply Secure Group, headquartered in Fort Lauderdale, Florida, in the United States of America. The group offers a range of services which are in many cases either complementary or similar to those provided by tTech and this acquisition will allow the Group to have a significant market position in Jamaica. With tTech as a wholly owned member of the group, the group will be able to operate in a more nimble and flexible way to serve the interests of its customers and the group’s stakeholders,” stated the takeover bid circular.

Based on the circular and the details contained in it, it’s possible that tTech would be in breach of the JSE rules surrounding ownership limits after the takeover bid is completed. The JSE rules require that at least 100 shareholders own 20 per cent of the company and that no shareholder own more than 80 per cent of a listed company. If this isn’t remedied, then the JSE can delist the company.

When IEC Energy Company Limited sought to acquire Ciboney Group Limited (now Innovative Energy Group Limited) in September 2023, IEC Energy clearly stated that if the shares deposited by shareholders would cause it to exceed the 80 per cent threshold, it would not accept anymore shares that would take it over that limit and would sell shares in the open market to ensure that there would be at least 100 shareholders owning 20 per cent of the company. This was on top of the company submitting an offer price that was significantly below the market price which was to disincentivise persons from wanting to accept the takeover offer.

Even MFS Acquisition Limited had similar terms in its takeover bid of SSL Venture Capital Limited (now MFS Capital Partners Limited) in May 2023. MFS Acquisition had set a very low takeover price, set a threshold where it wouldn’t accept anymore shares and noted its intention to sell shares to ensure the 100-shareholder requirement was met.

However, the section covering a potential delisting doesn’t outline any intentions to ensure that tTech would remain listed on the JSE if it was to surpass the 80 per cent threshold and 100 shareholders owning less than 20 per cent of the company. Instead, Simply Secure indicated that it intends to acquire any shares which were not surrendered during the takeover bid and were delisted as per applicable JSE Junior Market rules. It also noted that it would ask the JSE to keep tTech listed for an additional period if it surpasses that 80 per cent threshold to allow for it to complete the compulsory acquisition of the remaining shares in the company as per Section 209 (1) of the Jamaican Companies Act.

Following the November 15 trade with Enqueue and Auctus, the estate of tTech co-founder Hugh O’Brian Allen had the second largest shareholding with 8,367,479 ordinary shares or 7.89 per cent of the company. That was followed by Mayberry Jamaican Equities Limited with 6,421,966 shares or 6.06 per cent of the company, GraceKennedy (2009) Pension Plan, former tTech consulting services manager Marcelle Smart, Zachary Henry, Douglas Orane and Ja Credit Union Pension Fund, which collectively owned 5,191,566 ordinary shares or 4.90 per cent.

The offer price made to the remaining shareholders is the same price made to the largest shareholders during the year. tTech’s initial public offering (IPO) price for the general public was $2.50 and $0.75 – $2.25 for reserved parties including employees and key partners during the December 2015 offer. The company has paid $0.206 in dividends since listing, which means that this takeover bid will represent an 8 – 300 per cent gain for some investors that have been holding the stock since the company listed.

One consequence of the possible delisting for tTech is that tTech would be liable to pay Tax Administration Jamaica for the tax remission tTech would have enjoyed so far by being listed on the Junior Market. Between 2016 – 2023, tTech enjoyed a total of $40.26 million in tax remissions by being listed on the Junior Market.

tTech’s overall nine months revenue was down five per cent to $336.19 million, with the company reporting an operating loss of $231,000 relative to a $21.33 operating profit. There was also a net loss of $75,000 compared to a $18.60 million net profit in the nine months of 2023.

The total assets of tTech were up 11 per cent over the nine months to $357.41 million, with $98.04 million between cash and resale agreements. Total liabilities were $123.09 million while shareholders’ equity was $234.31 million.

tTech’s stock price traded between $1.61 – $2.10 with $82,813.81 of value changing hands on Friday when the takeover bid was published. tTech closed at $2.08 on Tuesday with the stock trading between $2.00 – $2.10.

Before the takeover bid closes, tTech’s directors will submit a directors’ circular which will contain the board’s assessment of the offer, an independent valuator/financial advisor’s opinion on the fairness of the offer and any additional information needed for shareholders to make an informed decision. These conditions will also be applicable during the Caribbean Producers (Jamaica) Limited’s takeover bid by AS Bryden & Sons Holdings Limited (ASBH), which will be published by January 5.