Jamaica Producers Group Limited (JP Group) and PanJam Investment Limited have set December 22 as the date for their respective extraordinary general meetings (EGM) whereby shareholders will vote on the proposed $110-billion transaction.

JP will hold its EGM at 10 am by the ROK Hotel in downtown Kingston while PanJam will hold its EGM at 11 am by the Courtyard by Marriott in New Kingston, St Andrew. The amalgamation is conditional on the approval of the majority of ordinary JP Group shareholders for the ordinary resolutions at its EGM and by three-fourths of the ordinary PanJam shareholders on the special resolutions at their EGM.

The transaction will occur with the JP Group transferring its operating assets to its newly incorporated intermediate holding company JP Global Holding Limited through a scheme of reconstruction. JP Group will then transfer JP Global’s issued and outstanding ordinary shares amounting to 561,565,133 ordinary shares to PanJam in exchange for 561,565,133 shares in PanJam or a number which equates to 34.5 per cent of the issued share capital. This would push PanJam’s issued ordinary shares from 1,066,159,890 shares to 1,627,725,023 shares. JP Global’s pro forma asset base was $44.29 billion.

“I believe the transaction will be good for Jamaica. We are seeing growth and opportunity for Jamaica right now. This is the time for the best Jamaican companies to step up and invest in our future,” said JP Group Managing Director Jeffrey Hall in an e-mail with the Jamaica Observer.

However, JP Group will retain $1.45 billion in cash and marketable securities to fund its declared dividends, ongoing operations and retained liabilities. It will also retain ownership of certain real property interests that have long been associated with JP (including three properties in Jamaica and one property in the United Kingdom), as well as ownership of its subsidiary Agualta Vale Limited which has land in St Mary, Jamaica, as its principal asset. Thus, JP’s sole operating asset will be its 34.5 per cent stake in PanJam.

The amalgamation will have a series of steps which include an exemption from the Tax Administration Jamaica from transfer tax, exchange of JP Global and PanJam shares and listing of the newly issued PanJam shares on the Jamaica Stock Exchange (JSE). JP and PanJam don’t expect the proposed amalgamation would be in contravention of the Fair Competition Act and that no take-over offer will be required. However, the Bank of Jamaica will have to be notified prior to the amalgamation taking effect due to a change in the majority shareholder of PanJam which has a substantial interest in Sagicor Bank Jamaica Limited.

PanJam shareholders would vote to approve the proposed amalgamation which is explained in the amalgamation booklet. They would also vote to make PanJam’s authorised share capital become unlimited, that the company’s name be changed to Pan Jamaica Group Limited and several amendments be made to the company’s articles of incorporation. The maximum number of directors on the board would be reduced from 15 to 12 along with the inclusion of a definition for significant shareholding which comprises not less than 21 per cent of the company’s issued shares. significant shareholding interests would be able to appoint and remove three directors from the board.

“Undoubtedly, the transaction’s success strengthens PanJam’s balance sheet, diversifies our investments and empowers the company to take advantage of opportunities that will come both locally and globally. As an investment company, PanJam leverages resources, both capital and expertise, in diverse enterprises for the benefit of our shareholders and ultimately national development,” said PanJam Executive Chairman Stephen Facey.

Facey’s major interest is through connected party Boswell Investments Limited which is the largest shareholder in PanJam with 32.30 per cent. With the dilution set to occur from the newly issued shares, Boswell will have a 21.16 per cent interest in PanJam which is above the significant shareholding mark. His cousin Paul Facey is the other Facey family member currently represented on the PanJam board.

Some of the proposed elements in support of the transaction include leveraging the economies of scale in central costs, benefits from geographic diversification, the combined balance sheet and liquidity and benefit from sector diversification. These sectors include financial services, global services, specialty food and property and infrastructure. The combined balance sheet would have $66 billion of net assets and $11 billion of cash and marketable securities.

“Upon completion of the proposed amalgamation, the combined business will emphasise a business strategy that directly and expressly harvests certain opportunities that would not be immediately available to either enterprise operating on its own. At the same time, they offer the group a powerful network of global relationships, opportunities, insights and market presence that can only come from the holding of a portfolio of investments that cuts across a broad range of industry sectors,” PanJam’s booklet stated.

Both companies relied on a fairness opinion from Ernst & Young Services Limited which used the income, market and asset approach to analyse the value of JP Global and PanJam’s assets along with determining a fair share exchange ratio. Ernst & Young agreed that the proposed transaction was fair from a financial point of view to JP and PanJam shareholders.

Both JP and PanJam’s share prices have experienced a substantial boost since the announcement on November 21. PanJam’s share price is currently trading at $57.09 which leaves it down 12 per cent year-to-date while JP trades at $23.26 which has not only erased its losses earlier in 2022, but also leaves it up five per cent year-to-date. JP even traded at a new 52-week high of $28 last Friday. At Monday’s market price, PanJam would be valued at $92.93 billion with JP’s proposed stake worth $32.06 billion.

JP Group just declared a $0.30 capital distribution to its shareholders to be paid on January 19 to shareholders on record as of December 20. This payment totals $336.64 million and is the highest payment to date for shareholders. PanJam shareholders are set to be paid a $0.10 dividend totalling $106.62 million on December 15.

“We all wish for peace for Jamaica and for improved education opportunities for young people. Private enterprise and economic development has a role, but these are the real outcomes that we ultimately care about right now,” Hall closed as his wish for Jamaica in 2023.