Stalled Access
ACCESS Financial Services (AFS) is yet to respond to a takeover offer from Dolla Financial.
Dolla Financial, a micro-lender which recently listed on the Junior Market of the Jamaica Stock Exchange, sent a letter to its competitor Access Financial on August 11, 2022, expressing an interest in exploring a takeover of full control of the entity.
The letter had asked Access Financial to “confirm within five calendar days from the date” of the letter “that the majority of the board is not opposed to our expression of interest and that you will engage in discussions in relation to formulating a mutually acceptable non-disclosure agreement.”
That deadline of five calendar days expired on Tuesday, August 16, 2022.
“They haven’t responded as yet,” Kadeen Mairs, CEO of Dolla Financial, told the Jamaica Observer on Tuesday. Efforts to get an update from Marcus James, the CEO of Access Financial, proved futile.
However a day earlier, Access Financial disclosed to the Jamaica Stock Exchange that though it had received a letter expressing an interest in a takeover from Dolla Financial, it has not engaged the entity in any discussion on the matter.
“The letter proposed a mutual non-disclosure agreement to be entered into between the parties and the mutual disclosure to the Jamaica Stock Exchange and the market at the appropriate time when terms are agreed. A few minutes after the board received this letter, we were surprised to observe various media reports suggesting that Dolla and Access are in discussions regarding a possible takeover of Access by Dolla. Neither Access nor any of its directors or employees was responsible for the disclosure to the media,” asserted James in the disclosure to the stock exchange.
Mairs, however, in response to the Business Observer said, without elaborating, “We are going through the due process. We have expressed interest and we are continuing to follow the process.” Dolla had also proposed an exclusive due diligence and negotiation period of 30 calendar days with Access Financial telling the entity in the letter that, “although our evaluation of a potential transaction is still at a preliminary stage including such material matters including offer price and transaction structure – whether by way of a takeover bid offer or a takeover scheme of arrangement – we strongly believe that confidential exploratory discussions will allow Dolla and Access to formulate transaction terms that will be of mutual benefit to both Dolla and Access shareholders.”
Mairs, however, told the Business Observer that a price at which Dolla intends to pay for Access Financial, if the proposal is accepted, has not been decided as yet. “They will have to agree to sell first then we will work on the price,” Mairs added.
In the letter last Thursday, Dolla outlined: “Given the preliminary nature of our discussions, we do not think it is necessary as yet to disclose our expression of interest to the market as it could cause irregular trading in either or our shares which could ultimately be detrimental to the successful completion of negotiations and erode the value of both our shareholders.”
However, since news of the takeover offer broke, Access Financial’s stock price has gone on a see-saw ride. On Thursday last week, the company’s shares were being traded at $19.21 but that rose to a 52-week high $30.74 cents in intra-day trading on Monday, before settling at the close of trade at $28.27. On Tuesday, Access Financial’s closing price was $26.67, giving it a market capitalisation of $7.32 billion.
At the same time, Dolla Financial, which had a share price of $2.81 on Thursday, rose to $3.25 on Monday, its highest price since July 21 before settling at $3.04 on Tuesday. Dolla’s shares dominated trading on Tuesday accounting for nearly 1 in every 5 shares traded on the day.
While AFS says that it has no proposed offer for consideration, the company’s annual general meeting on September 8 at the Courtleigh Hotel will be a closely monitored event as James’ re-election as a director will be on the ballot, along with Proven Management’s Charmaine Boyd-Walker. This is the second major development for the AFS founder as he tackles a marriage dissolution/divorce lawsuit in the Broward County Circuit Courts with his estranged wife Julie Thompson-James, who also applied for a freezing order on James’ assets or those held on his behalf.
James is the largest shareholder in AFS through Springhill Holdings Limited with 47.33 per cent interest.
AFS’s consolidated loan book stands at $4.65 billion, while Dolla’s loan book stands at $1.05 billion which leaves them as the largest players in the market.
AFS became the first microcredit company to be licensed under the Micro Credit Act by the Bank of Jamaica on August 1.