A JMMB branch on Knutsford Boulevard in New Kingston. - File
The top management of Jamaica Money Market Brokers (JMMB) has declared the company safe from any hostile takeover following the troubles of Lawrence Duprey's CL Financial group, which has a 40 per cent stake in the listed local securities entity, and has itself been taken over in a rescue bid by the Central Bank of Trinidad.
"It is not possible at all for the company to be taken over," Keith Duncan, JMMB group chief executive officer, declared in response to questions about what might become of CL's stake in the investment brokerage house.
Welcomes prospect
Rather than expressing any apprehension, Duncan says he welcomes the prospect of the 450 million shares or 30 per cent holding by Clico Investment Bank, and another 10 per cent of JMMB held by CL Financial through Colonial Life Insurance Company Ltd, being sold to an entity that will bring some cash to the table as a partner.
"Just speculating on shareholders, probably we will get a nice cash-rich one like First Citizen Bank out of Trinidad, which is very cashy and the second largest bank in Trinidad," said Duncan.
The brokerage's market value tops $6 billion, with its more than 1.46 billion of issued shares last trading at $4.15 on the Kingston exchange. In Trinidad, where it is cross-listed, the stock last traded at 56 TT cents.
"We know that there will be interested parties locally and regionally, but any party that comes to the table will have to sit with the majority shareholders, who are us," Duncan insisted.
One CLICO representative, Ram Ramesh, currently sits on the JMMB board and prior to Clico's problems, the Trinidad-based company had no interest in becoming an active shareholder, according to the JMMB CEO.
There has been no indication to date that First Citizen, which was the takeover vehicle for CLICO Investment Bank plans to replace him with its own nominee.
"We have had discussion with Clico and they are happy being passive shareholders. They don't want to be active shareholders," said Duncan.
"We are not sure who will eventually get the shares, but we are keeping ourselves abreast of what is going on. We are 100 per cent sure that there will be no move or any kind of hostile takeover; nothing like that is possible."
Key to balance of power
Meanwhile, it appears that an employee share ownership plan, started by JMMB in 1996, holds the key to the balance of power, with regards to the distribution of shares.
"Between the Duncan family and the Lyons, the original foundation shareholders, we have over 40 per cent. With the ESOP we have over 51 per cent, and through ESOP we have kept and made sure that we have full management control," said Duncan, whose mother, Joan Duncan, started the company in 1992.
According to figures contained in the company's 2008 Annual Report, the JMMB ESOP, which includes Duncan and his sibling, Donna Duncan-Scott, as well as the holdings of the ESOP representative on the board, Cedric Stewart, controls a total of more than 290 million shares, or about 20 per cent of the company.
Duncan and his sister are stated as controlling just about 240 million or 16 per cent of the share issue.
While chairman Noel Lyon has no personal stockholding, through connected parties, Gracelyn O.E. Limited, Nicole Lyon and JVF O.E Limited, he controls over 96 million shares or about 6.5 per cent of the company.
Distribution of shares
Another director, Wayne Sutherland, controls 113 million shares representing a 7.5 per cent holding, while 115 million shares, or a little under eight per cent of the stocks, are held by Concise AV Limited and JVF AV Limited, which are listed among the top 10 stockholders, but not shown as being connected to any JMMB director.
Financial analyst, John Jackson is not convinced that there is the real possibility of one or more minority shareholders selling to give rise to the emergence of a majority shareholder other than the Duncans.
"It could present a potential, but in the short term, I am not sure if this is a measure to be pursued. I don't feel that is on the cards for the short term is my assessment of it," he suggested.
"The more immediate issue is likely to be the impact on the minority shareholders and the potential for share value to decline," he said, "not a takeover."
sabrina.gordon@gleanerjm.com