RBTT SOLD

[Djedi Maaur]

RBTT sold for $14B

By ROXANNE STAPLETON-WHYMS Thursday, March 27 2008

A valiant fight put up by a vocal group of shareholders failed to block the sale of RBTT Financial Holdings, parent company of RBTT Bank, to the Royal Bank of Canada (RBC) for an estimated $14 billion.

It took just over two hours for the votes of 16,000 shareholders to be tallied after the count began at about 5 pm, at the Hilton Trinidad, St Ann’s. The final result showed that an overwhelming majority, 98 percent, accepted RBC’s offer of 40 per RBTT share, which will be payable in a combination of cash and RBC common shares. The vote exceeded the required 75 percent that was needed to approve the sale.

In a statement last evening, RBTT Group chairman Peter July described the deal as “an amalgamation transaction” that was a “historic decision”, one “which will benefit all stakeholders.”

However not everyone felt the RBC acquisition would be beneficial and strongly objected to it, first in a protest at the foothill of the Hilton and later at the meeting which began at about 9.40 am in the ballroom.

Protesting members of the Federation of Independent Trade Unions and NGOs (Fitun) greeted RBTT directors and shareholders with a noisy protest at the Hilton’s entrance on Lady Young Road. It was a clear indication that the going would be rough.

Inside the Hilton ballroom, minority shareholders grilled July and his CEO Suresh Sookoo about whether the transaction was ethical and above board. They demanded answers. One shareholder even resorted to quoting verses from the Bible.

One shareholder asked if they would be allowed to oversee the counting of the votes and July invited the person to do so, but another shareholder demanded a chance to do the same too.

Another asked if there had been any other bidder for the RBTT group but a frustrated July said he could not answer because all of the discussions were confidential.

July, who has been at the helm of RBTT for decades, appeared solemn after the voting took place as security briskly escorted him up a set of stairs to another area of the Hilton. The ballot boxes were also taken out of the ballroom, and some were carried on luggage trolleys.

RBTT director and Guardian Holdings chairman Arthur Lok Jack passed reporters as he smiled and chatted on his cell phone, indicating that he had no comment. Guardian Holdings held a 12 percent stake in the RBTT group. So too did members of Fitun, whose 12 percent stake was held in a trust by RBTT. Other directors like energy specialist John Andrews and businessman Gary Voss engaged in light banter, greeting people on the hallway.

Former Finance Minister Wendell Mottley also chatted with bankers and businessmen.

Ordinary shareholders were not so chatty, as they emotionally declared they had voted against the sale.

RBTT shareholder and former education minister Augustus Ramrekersingh said he was “totally against the sale,” and had attended the meeting to demonstrate his patriotic right.

Petra Bridgemohan, a former Trinidad and Tobago Transparency Institute spokesperson, described RBC’s bid as “a corporate raid” and wanted the directors to return to the drawing board.

Vice chairman of the Disabled People International World Executive George Daniel also voted against the sale and called the transaction “appalling and out of order.”

As he emerged from the ballroom, Fitun president David Abdulah said most of the shareholders strongly criticised the directors and felt they were either not forthcoming nor democratic enough.

“Ordinary shareholders saw through all the smoke screens that this is not an amalgamation nor partnership, but a straight takeover by RBC. Regardless of how the vote is, I believe that a victory has been won by ordinary people of society who have stood up and said no to those who are holding power and using that power for their naked self interest,” Abdulah said.

He questioned “interlocking directorships” where persons who sat on the boards of billion-dollar firms also sat on the boards of the RBTT group.



He said the National Insurance Board, which with a 20 percent stake voted for the sale, was in favour of a few wealthy people.

“The pension plans of Petrotrin, Trinidad and Tobago Electricity Company, Telecommunication Services of Trinidad and Tobago and National Petroleum, those four companies have more than 11 or 12 percent of RBTT shares, so our pension funds match GHL’s (Guardian Holdings Limited) in terms of voting power.”

Outspoken minority shareholder Peter Permell maintained that shareholders should have been given a 100 percent cash back deal.

As the shareholders dispersed, the RBTT directors remained at the hotel for the rest of the afternoon into late evening while the votes were being tallied.

As shareholders met to decide the future of RBTT, investors yesterday snapped up 254,783 shares with a market value of $8.92 million, making it the most actively traded stock in terms of volume and value. RBTT also got the largest price movement of the day jumping 97 cents to $34.99.

In his statement, July said the group would now seek to satisfy the regulatory requirements to ensure that the transaction could be closed in the shortest possible time-frame.

The deal is expected to be sealed in May or June.

[Djedi Maaur]

It was the ultimate David versus Goliath corporate battle for one of the country's largest commercial banks.

This time, Goliath won.

Although hundreds of emotional RBTT Bank minority shareholders voted against the sale of their bank, the larger stock portfolios of bigger institutional shareholders added up last night, to seal the deal that allows the Royal Bank of Canada (RBC) to buy RBTT in a deal worth US$2.2 billion.

Late last night final vote count results showed that shareholders had voted 98.18 per cent in favour of the sale to RBC.

The vote signals the return to Trinidad and Tobago of RBC-Canada's largest bank-after it left the country 23 years ago, and means an end of the corporate entity known as RBTT Bank, as it will now become part of RBC's assets.

RBC operated in Trinidad and Tobago for 80 years before it left in 1985, which in turn led to the formation of the RBTT Bank.

Majority shareholders, including institutional investors like the National Insurance Board and Guardian Holdings Ltd, led the voting in favour of RBC taking over RBTT Bank at a special shareholders' meeting held at the Hilton Trinidad in St Ann's yesterday.

The NIB owns a 22 per cent of RBTT Bank stock, while Guardian Holdings owns more than 12 per cent of RBTT Bank stock.

Stock of RBTT Financial Holdings (the parent company of RBTT Bank) closed on the local stock market yesterday, at more than $34 per stock unit with about 250,000 shares bought and sold.

RBTT Bank shareholders will get a $40 value for their stock in a cash/RBC share split.

Smaller, individual shareholders, numbering just over 700, crammed the Hilton ballroom and turned what might have been a sombre meeting into an emotionally charged event, as they protested the sale of RBTT Bank to a foreign superbank, but they were ultimately outgunned by the share firepower of larger investors.

Several times during the meeting, individual shareholders criticised larger stockholders and accused them of being liars and thieves.

Approximately 1,400 other shareholders voted by proxy in a process that started as early as 9.30 a.m. yesterday.

RBTT has almost 16,000 shareholders.

Shareholders were greeted by about 40 protestors representing the Federation of Independent Trade Unions (Fitun) at the entrance to the Hilton, while police officers kept watch.

Inside the Hilton, teams of RBTT Bank security officers ensured that only registered stockholders were allowed inside the ballroom for the meeting, led by RBTT Financial Holdings chairman Peter July and including RBTT Group chief executive Suresh Sookoo.

Voting continued as July presented the rationale for the sale of the bank to RBTT, and answered questions from irate shareholders who did not want to willingly surrender their shares in a national bank to what they considered an outside bank, even though they will ultimately receive $40 a share for their stock.

When the transaction is completed in June, shareholders will get $24 in cash per stock unit and $16 in RBC common shares which are traded on the US stock market.

This deal was not sweet enough for the hundreds who filled the ballroom to capacity yesterday.

Fitun president general, David Abdulah, said this was a fight between the big versus the small and ultimately, the smaller votes would not be enough even though there were more individual investors who protested the RBC takeover of RBTT Bank.

He said there remained questions of transparency and issues of patrimony in the deal.

"It is a still a victory for the ordinary people (because they objected to the deal)," he told the Express.

Former stockbroker Winston Padmore, a long-time RBTT Bank shareholder, also opposed the sale and compared it to a debate in Parliament.

He suggested that Government should have stepped in and overseen the transaction, because the sale of RBTT Bank had a part to play in the future development of the country.

Padmore also pointed out that RBC was allowed to take control of RBTT Bank even though Canada does not allow foreign entities to own Canadian banks.

A shareholder said she voted against the sale but resigned herself to having to surrender the RBTT stock, which her mother had bought for her as a first investment and which she promised never to sell.

Another shareholder brought his three young sons to the meeting to show the larger investors who approved the deal that they would be depriving his children.

RBTT stockholder Peter Permell also disapproved of the sale of the bank, but said that some ordinary shareholders were not well informed about the details of the deal and could not effectively comment.

Financial expert and independent senator, Subhas Ramkhelawan, noted that during the meeting, concerns were expressed by shareholders that this was a takeover and not an amalgamation as expressed by RBTT Bank and RBC executives.

He said opposing shareholders believed the vote in favour of RBC acquiring RBTT Bank would mean that the local bank would become a "non-surviving entity", and shareholders felt there were policy implications for the country in deals like this.

"The process is difficult for shareholders to accept but based on our analysis, the pricing was not unreasonable," he said.

After the voting process was completed, counting of ballots led by Aegis Business Solutions commenced at around 1.30 p.m. in a secure room at the Hilton, that not even RBTT Bank senior staff were allowed into.

Four hours later, at around 5.30 p.m., only a preliminary count had been completed and a double check of votes had started.

The count continued until after 7.30 p.m.