Sagicor looking to raise BDS$320M through new shares
Tuesday May 17 2011 | 02:08 AM

Financial services giant, Sagicor Financial Corporation, is about to launch a massive effort to raise $320 million, the largest such undertaking since it morphed from the Barbados Mutual in 2002.

Barbados TODAY has learnt that hundreds of shareholders, including the National Insurance Board and others in Barbados, will on June 2 be asked to approve three resolutions at Sagicor's 8th annual general meeting at Hilton Barbados, paving the way for the offer of more than 12.2 million in new common shares.

But in addition to that, shareholders will be asked to say yes to the issuance of 120 million of a new class of preference shares called convertible redeemable preference shares.

They were officially notified of this move to "rebuild investor confidence and strengthen its capital base" in a May 10, 2011 letter from Sagicor Chairman Stephen McNamara, in which he revealed the share offers were necessary for the company to receive an injection of $200 million from the International Finance Corporation.

"Under these two agreements, IFC will invest up to US $100 million in Sagicor, subject to certain terms and conditions. The investment will take the form of US $20 million in new common shares, at the price of US $1.63 per common share, and up to US $80 million in new preference shares, at the price of US $1.00 per preference share," he said.

McNamara announced that, once they agreed to it, shareholders "will, as far as possible, be afforded the opportunity to invest in Sagicor, as part of the transaction, by participating in the purchase of new common shares and new preference shares at the same prices as those agreed with IFC".

"The offer to qualified Shareholders and IFC's subscription are subject to all necessary regulatory approvals and authorisations. Additionally, the issue of the new preference shares is subject to shareholders' adopting amendments to Sagicor's Restated Articles of Incorporation to provide for the creation of a new class of preference shares called Convertible Redeemable Preference Shares," he said.

"IFC and Sagicor intend to develop a significant relationship, which your directors believe will be very advantageous to Sagicor, and will ultimately benefit all of our shareholders. The proposed strategic relationship will provide access to a wide network of opportunities, new product offerings, and technical support."

The chairman also said the funding to be accessed would "significantly enhance Sagicor's financial position and provide us with additional long-term capital to pursue our regional growth and expansion strategy (and) cement Sagicor's position as the leading provider of insurance and ancillary financial services in the Caribbean".

He reported too that "substantially, all of the members of the board and executive management, who are qualified to participate in this investment opportunity, have indicated their intention to participate".

He also told shareholders the subscription price which IFC will pay for the common shares is US $1.63, which exceeds the market prices of BDS $3.06 on the Barbados Stock Exchange, TT $8.50 on the Trinidad and Tobago Stock Exchange, and 97.50 pence on the London Stock Exchange respectively as at March 31, 2011.

But before Sagicor and the IFC can tie up the $200 million they will have to get shareholder permission, and according to further documentation obtained by Barbados TODAY, Sagicor Corporate Secretary Sandra Osbourne also on May 10 informed those with stock in the company of three resolutions they would be have to vote on at the AGM.

In the first instance a simple majority will be needed to approve the planned investment by the IFC, but it will take a special majority (two thirds) to amend the company's Restated Articles of Incorporation dated July 30, 2009 to allow the new shares to be issued. A simple resolution is also required to amend its by-laws established in 2002 and last amended in 2007 for the allocation of the new category of convertible redeemable preference shares.

Sagicor officials said a Common Share Rights Issue would be listed for trading on the Barbados Stock Exchange and the Trinidad and Tobago Stock Exchange on four business days during the period in which the Common Share Rights Issue remained open. If successful, the new common shares would be listed on the Barbados Stock Exchange, Trinidad Stock Exchange and London Stock Exchange, while the Convertible Redeemable Preference Shares would be listed on the Barbados Stock Exchange and Trinidad and Tobago Stock Exchange.