22 Jun 2020 07:00
Caribbean Investment Holdings Limited
22 June 2020
This announcement contains inside information
CARIBBEAN INVESTMENT HOLDINGS LIMITED - AGREEMENT TO ACQUIRE SCOTIABANK'S LICENCED BELIZE BANKING OPERATIONS
Road Town, Tortola, British Virgin Islands, 22 June 2020 -- (London - AIM: CIHL; Bermuda - CIHL) (the "Company" or "CIHL").
The Company today announces that it has reached an agreement for the purchase of Scotiabank (Belize) Ltd. ("SBL") from Scotiabank Caribbean Holdings Ltd., (the "Seller") a subsidiary of The Bank of Nova Scotia ("BNS"), for an initial purchase price of up to US$30.5 million ("Acquisition"). The Acquisition is subject to regulatory approval and customary closing conditions.
Terms of the Acquisition
The Acquisition will be effected pursuant to a share purchase agreement among the Company, the Seller and BNS dated 19 June 2020 (the "Agreement"). Under the terms of the Agreement the Company will acquire all of BNS's licenced banking operations in Belize through the acquisition of the entire issued share capital of SBL.
Under the terms of the Agreement the Company will pay the Seller an initial consideration of up to US$30.5 million (the "Initial Purchase Price") at closing of the transaction. The Initial Purchase Price amount includes both the expected shareholder equity of SBL of US$28.5 million and a premium of US$1.5 million.
In addition to the Initial Purchase Price, the Company may be required to pay up to an additional US$4.5 million in the event that the shareholders equity of SBL exceeds US$28.5 million (the "Additional Consideration") as a result of any regulatory change occurring between signing and closing of the Agreement. Any Additional Consideration will be payable upon the agreement or determination of the post-closing consideration adjustment process.
The consideration up to and including US$30.5 million will be payable by the Company in US dollars. Any consideration payable by the Company over that amount will be denominated in Belize dollars.
Accordingly, the overall maximum consideration payable for the Acquisition is US$35 million, which represents a Substantial Transaction for the Company for the purposes of AIM Rule 12. The Company will satisfy both the Purchase Price and any Additional Consideration by using available cash resources of CIHL, which the Board has made available for synergistic acquisitions in the banking and financial services sector in the Caribbean and Central America.
The Agreement is subject to regulatory approval and customary closing conditions. In addition, the Agreement has a condition that the notional aggregate consideration shall not exceed US$35 million. The Agreement has a long stop date for closing of 12 months from the date of the Agreement. The Company will make a further announcement regarding closing in due course.
In addition to the Agreement, upon closing SBL and BNS will enter into a transitional services agreement which will run for a period of up to 18 months from closing, and, SBL, The Belize Bank Limited ("BBL") and BNS (or its nominee) will enter into a foreign exchange and deposit commitment arrangement relating to the deposit of Belize dollars with SBL and BBL, and, the sale of US dollars and purchase of Belize dollars by SBL and BBL, allowing BNS to extract US dollars from Belize over time following closing of the Acquisition.
Information on SBL
SBL represents Scotiabank's banking operations in Belize. It has been in Belize since 1968, and currently has 9 branches and 21 ATMs. SBL offers a complete range of retail and commercial banking services across Belize, including online banking and electronic cash management.
For the financial year ended 31 October 2019, SBL recorded a profit of US$5.30 million, and revenues of US$36.52 million. As at 31 October 2019, SBL had assets of US$389.9.
Reasons for the Acquisition
The Board of CIHL has been exploring potential acquisition opportunities in line with its previously disclosed expansion strategy. The Board of CIHL believe that the purchase of SBL is an opportunity for the Group to expand its existing banking operations in Belize and that there are synergies between the Group's current banking operations and the operations of SBL. As a consequence of the Acquisition, the Group's banking operations in Belize will be significantly expanded. The Acquisition is expected to be immediately earnings enhancing to CIHL.
Person releasing this information on behalf of CIHL: Philip Osborne, Company Secretary
For further information contact:
Caribbean Investment Holdings Limited
UK +44 (0)207 248 6700
Cenkos Securities plc
Nicholas Wells +44 (0)207 397 8920
Note: This and other press releases are available at the Company's website: http://www.cihltd.co.
Background Information
Caribbean Investment Holdings Limited ("CIHL") is a parent holding company with no independent business operations or assets other than its investments in its subsidiaries, intercompany balances and holdings of cash and cash equivalents. CIHL's businesses are conducted through its subsidiaries. The Belize Bank Limited ("BBL") is incorporated and based in Belize and focuses on the provision of financial services and lending to domestic clients. Belize Bank International Limited is incorporated and based in Belize and focuses on the provision of financial services and lending to international clients. CIHL also owns an international corporate services business based in Belize, which operates as Belize Corporate Services Limited. Within Belize, BBL is one of the largest, full service commercial and retail banking operation with a head office in Belize City and eleven branches extended into each of the six districts of Belize. The principal operations of BBL are commercial lending, consumer lending, deposit taking and related banking activities.