4 months ago
23
The directors of Key Insurance Company Limited have endorsed an offer from the company’s largest shareholder GraceKennedy Financial Group Limited to acquire 100 per cent of the Key’s shares.
The buy up of minority holdings, if successful, would result in Key being delisting from the Jamaica Stock Exchange, the rules for which require that no one entity can own more than 80 per cent of a listed stock.
GK Financial, a fully owned subsidiary of the food and finance conglomerate GraceKennedy Limited, already owns 73 per cent of Key. It is offering $2.70 per share – just over $400 million in total – for the other 149.5 million shares held by minority investors. The offer runs from March 24 to April 22.
Key Insurance’s board of directors indicated that the $2.70 offer was fair, a price that exceeds the net asset value of $2.56 per share, based on Key’s 2024 audited financial statements.
The decision was made by a special committee comprising independent directors Rochelle Cameron, Herma McRae, Linval Freeman, Heather Goldson, Ashley-Ann Foster-Horne and Sandra Masterton. The director’s circular released on Monday noted that no directors appointed by GraceKennedy participated in the special committee meeting.
If GK’s stake surpasses 80 per cent under the offer, it would trigger a potential delisting, rendering the remaining shares illiquid and leaving non-accepting shareholders with reduced trading options and additional transactional taxes, the independent directors said.
Independent assessors validated the premium on the offer price, with DC Tavares & Finson Realty Limited valuing Key Insurance’s real estate holdings at $325 million, NAI Jamaica Langford and Brown appraising furniture and equipment at US$325,110 ($50 million), and Auto Assessors & Associates Limited estimating the value of the company’s vehicles at approximately $11.5 million. These assessments, detailed in the circular, affirm that the offer price aligns with or exceeds the company’s asset-backed value.
GK acquired control of Key Insurance five to six years ago, when the company was distressed and in need of capital.
If its current offer results in its ownership rising to or above 90 per cent, it could result in a “squeeze out” or compulsory acquisition the shares of dissenting shareholders, as allowed under the Companies Act.
Key Insurance was initially listed on the junior market of the Jamaica Stock Exchange in March 2016 before transitioning to the main market in April 2020.
For its financial year ending December 2024, Key Insurance Company generated higher revenue and profit, with revenue growing to $3.0 billion from $2.5 billion in 2023 and profit increasing to $67 million from $42 million. The company’s capital stood at $1.4 billion, half of which was held in cash as of December.
Key Insurance was founded in 1982 by insurance veteran Sony Gobin, whose family continued running the business after his passing. Masterton, a family member who previously served as managing director of Key, remains on the board as an independent director.
In 2018, the company breached a key solvency requirement, the Minimum Capital Test, prompting the enactment of a five-year turnaround plan under the watchful eye of regulator Financial Services Commission. Key reported progress on its MCT ratio in 2019 and 2020, before announcing that GraceKennedy would acquire a majority stake in the company.
In the wake of the takeover, there were changes to the board, new management was put in place, and fresh capital was later injected via a rights issue.
English (US) ·