Done deal! Shareholders approve JP, PanJam merger

December 25, 2022

Shareholders of Jamaica Producers Group Limited (JP Group) and PanJam Investment Limited gave their stamp of approval last Thursday to the proposed merger of the entities as they voted in favour of the various resolutions at the respective extraordinary general meetings (EGM).

The JP Group EGM was held at the ROK Hotel in downtown Kingston where veteran and younger shareholders listened and opined their thoughts to the management on the proposed $110-billion deal. While Edward Isaacs dissented to the resolution, the other shareholders present all voted in favour of the transaction with PanJam.

“Few regional businesses have the breadth, scope and network of the Pan Jamaica Group. This enterprise, collectively, will be the largest landowner, including Kingston Wharves, in the capital city of Jamaica. JP expects its interest in the Pan Jamaica Group to deliver strong returns for its shareholders. JP will be a supportive and vigilant shareholder,” Hall said after the EGM on the future of JP.

At the PanJam EGM, Chief Executive Officer Joanna Banks gave reasons as to why shareholders should support the deal. This also included pro-forma information which shows that the combined business would have the fifth-largest market capitalisation on the Jamaica Stock Exchange (JSE) based on last Tuesday’s closing prices. Although Orette Staple voted against resolution one, the majority voted in favour of the proposed amalgamation with the remaining resolutions receiving unanimous votes in favour.

“This is truly a historic day for PanJam and for all of us as shareholders of the company. Through this business combination, with exposure to such a wide range of sectors, we become the quintessential Jamaican conglomerate. Any investor, either local or international, who wants exposure to the broad Jamaican, regional economy should look to the expanded PanJam as the perfect investment vehicle,” Banks said on the significance of the deal.

With shareholder approval secured, JP Group will now execute a scheme of reconstruction where the operating assets of the group, excluding some retained capital and assets, will be transferred to JP Global Holdings Limited within one month. This will require confirmation from Tax Administration Jamaica that the proposed amalgamation is exempt from transfer tax.

Once this step is complete, JP will transfer 561,565,133 ordinary shares in JP Global free from all liens to PanJam in exchange for an equivalent number of shares in PanJam equivalent to 34.5 per cent of PanJam’s issued share capital. The shares will then be listed on the JSE which would result in JP Group becoming the largest shareholder in the PanJam, which is to be renamed Pan Jamaica Group. This is expected to be completed by March 31, 2023, which is the end of the first quarter for both companies which will remain listed on the JSE.

JP Managing Director Jeffrey Hall presented several positives of the deal which included an aggregated set of financials which showed consolidated revenue of $30.2 billion, $11 billion in consolidated net profits and a capital position of $20.3 billion in cash, repos and investment securities.

Hall, Alan Buckland and Charles Johnston are set to be appointed to the board of Pan Jamaica which will be capped at 12 directors while JP will appoint one director nominated by the PanJam board to its board of directors. The Facey family would end up owning 26 per cent of Pan Jamaica while other existing shareholders would own 39.5 per cent of issued shares.

Based on PanJam’s $820.94 million in interim dividend payments for 2022, it would have collected $283.23 million in dividend income based on its expected stake. JP Group’s accounting treatment of the Pan Jamaica Group will likely be revealed around May. JP Group will also collect $109 million in annual rent related to the Agualta Vale land’s, other commercial retained properties and intellectual property which will be retained.

JP’s stock price closed at $22.23 on Friday while PanJam’s price closed at $55.21 which leaves it down 15 per cent year to date. Despite the decline, an investor purchased 1.7 million shares of PanJam for $93.84 million on Friday.

“Pan Jamaica Group will thrive and endure because it is strategic, diverse and bold and builds on a solid foundation. We have the capital to seize new opportunities and to withstand the difficult macroeconomic environment,” Hall closed.

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