PanJam Investment Limited will create and issue new shares to shipping and food company Jamaica Producers Group, JP, as part of their amalgamation deal that will dilute the shareholdings of existing PanJam owners by one-third, including the Facey family.
Independent auditor Ernst & Young Services has assessed the deal as fair.
Jamaica Producers will end up with 561.56 million shares in the combined business to be known as Pan Jamaica Group, giving it a 34.5 per cent stake, in exchange for its operational assets, which are now held in a newly created company called JP Global Holdings Limited. In exchange for the PanJam shares, Jamaica Producers will transfer 100 per cent ownership in JP Global to PanJam.
Shareholders of Jamaica Producers and PanJam Investments will meet one hour apart on December 22 at separate hotels owned by PanJam – the ROK Kingston on the waterfront, and Courtyard by Marriott in the business district of New Kingston – to vote on the ‘scheme of reconstruction’ to enact the amalgamation.
Both JP and Pan Jamaica Group will remain listed on the main market of the Jamaica Stock Exchange after the merger of operations.
The ordinary shares to be issued by PanJam will increase the number of units to about 1.628 billion shares and result in Jamaica Producers becoming the single largest owner of Pan Jamaica Group. The new shares, at Friday’s closing price, would lift Pan Jamaica’s market capitalisation to around $93 billion, up from $61 billion, assuming the price of the stock remains steady in the $57 range.
PanJam, an investment holding and property conglomerate, is controlled by the Facey family, which holds 344 million shares through Boswell Investments.
Overall, however, market disclosures to the end of September indicate that Stephen Facey and connected parties hold a combined 417.7 million shares, which equates to 39.2 per cent interest in PanJam Investment Limited. The proposed deal would dilute the Faceys’ holdings – both Boswell and direct holdings – to about 26.5 per cent.
As conditions now stand in the market, the new shares to JP would be worth around $32 billion. PanJam, meanwhile, will get about $35 billion in operational net assets held in JP Global Holdings as of October, according to market filings.
In its assessment of the transaction dated November 17, EY looked at the various companies held by each group, and assessed them using the income, market or asset valuation approach. They ultimately focused, however, on the outcome for shareholders, saying the proposed share exchange ratio of 65.5 per cent to 34.5 per cent agreed between PanJam and JP falls within its range of calculated ratios and “was fair from a financial point of view” to shareholders of both companies.
JP will continue to operate as a separate company outside the new group. Its primary business would become the investment management of its shares in, and proceeds from, the new Pan Jamaica Group.
The merger is intended to position the group to go after or ‘unlock’ investment opportunities, internationally. The combined business will hold assets of over $110 billion, $66 billion in net assets, and $11 billion of cash and marketable securities, according to the circular.
“This combined balance sheet strength together with its array of shared expertise, will allow it to take on larger opportunities with more developed revenues, business lines and overall prospects. This may in turn improve access to capital and broaden the range of capital markets in which the Pan Jamaica Group can operate to fund opportunities and create more flexibility in delivering and maintaining returns to shareholders,” the circular stated.
On completion of the merger, Stephen Facey will serve as non-executive chairman, current JP CEO Jeffrey Hall will become executive vice chairman and CEO of Pan Jamaica Group, while current CEO of PanJam will become president of the group.
However, sometime between January 1, 2024 and January 2, 2025, Hall will replace Facey as executive chairman, and Banks will become CEO of Pan Jamaica Group.