A year after Banks DIH (BDIH) Chairman Clifford Reis announced that the company’s sale of shares in Barbados beverage conglomerate Banks Holdings Limited (BHL) to Brazilian AmBev Group of Companies would see the company getting access to manufacture almost two dozen more beer brands, he reported to shareholders yesterday that the process was not as easy as planned.
“We have had discussions with AmBev but it was not as easy as planned… we are still going through various levels of approval. We have to go through Mexico, Brazil, New York and it is not easy to get information,” Reis said in response to a request for an update at the company’s Annual General Meeting yesterday at Thirst Park.
Reis also noted in his presentation that the 5% of issued share capital of the company is held by AmBev as part of an agreement to cooperate in the marketing of beverages in the future.
While he maintained that BDIH would still be gaining access to the 20 beers, such as Corona, Skol, Brahma and Bex, for which the company holds trademarks, he would not provide concrete information as to the process or time involved. Rather, he noted that several mergers and acquisitions, which AmBev has undertaken in the last year, have complicated the process.
“We are hoping that by the second quarter of this year, we might be able to launch one of the beers,” he told shareholders.
In December, 2015, BDIH sold its holding of ordinary shares in BHL, which amounted to 4,358,815 ordinary shares or 6.7% of the issued share capital of that entity to SLU Beverages Ltd, a subsidiary of AmBev. The transaction was carried out on the Barbados Stock exchange at a price of Bds$7.10 per share and represented a net gain of $1.147 billion for Banks DIH.
In a statement about the sale, Banks DIH said it was both “financially and commercially advantageous” and would increase shareholder value. The sale was seen as key to a takeover of BHL by AmBev, ahead of Trinidadian conglomerate ANSA McAL, which was also seeking control of the company.
That sale also precipitated the company’s repurchase of its shares from the Barbados Company at a total cost of Gy$5.5 billion.
In his presentation last evening, Reis noted that in 2005 the company entered into a Memorandum of Understanding (MoU) with BHL and a key feature was the companies acquiring ordinary shares in each other. He explained that the MoU proceeded on the basis that it would continue in existence so long as there was no radical change in the shareholding of BHL.
“With AmBev’s successful takeover of BHL and the sale of BDIH shareholding in BHL, the company was advised that it was a natural consequence under the implied terms of the MoU that BHL should no long continue to hold shares in the company,” Reis said.
As a consequence of this advice and using a 2015 valuation conducted by PricewaterhouseCoopers (PwC), BDIH on December 1, 2016 repurchased 150,138,464 of its ordinary shares, representing 15% of the issued share capital from BHL.
The consideration for the repurchase of ordinary shares was $5,523,594,000 financed through cash resources of $4,523,594,000 and borrowings of $1,000,000,000. This transaction is expected to reduce capital and reserves attributable to shareholders.
Additionally, BHL still holds 5% of the issued share capital of the company, since BDIH and BHL under its new controlling shareholder AmBev have agreed to cooperate in the marketing of beverages in the future.
