In March of this year the TCI Journal posted a document created by the banking regulators in the United States on the dangers of Parallel Banking.  It begins as follows:

 

“JOINT AGENCY STATEMENT ON PARALLEL-OWNED BANKING ORGANIZATIONS

 

PURPOSE

 

This statement discusses the characteristics of parallel-owned banking organizations, reviews potential risks associated with these banking organizations, and sets forth the approach of the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision (collectively, “the banking agencies”) to supervision of those risks. It also provides information on the applications process for proposals involving parallel-owned banking organizations.

 

……….”

 

The Full Document  can be found here:  Joint Agency Statement [pdf format -35kb]

 

 

We speculated early this year that there may be something in the works similar to the demerger announced yesterday by BCB Holding Ltd..  All the tea leaves pointed us in this direction even then.

 

Now with this announcement it is critically important that the TCI Financial Services Commission, FSC, make a public statement as to its position on the demerger.  That it MUST work closely with the Central Bank of Belize and the London Stock Exchange to co-ordinate any regulatory actions that may or may not be required to protect and secure the interests of depositors and citizens.  It must not be found asleep at the wheel.

 

 It is also important that the TCI Attorney General, Huw Shepheard, comment on how this demerger may or may not affect the claims that former employees and creditors of Johnston International, including the TCI Government and National Insurance Board, NIB, may have against BCB Holdings Ltd. for the initial handling of the receivership of Johnston by BCB appointed Keith Arnold.  He must also speak and say if he will act on behalf of TCIG in this matter and if he feels any laws have been broken. He must also comment on how this might affect any claims, if any at all, arising out of the work of Helen Garlick.

 
 

The TCI public and the UK media are watching closely and waiting to hear Huw Shepheard’s response.

 

And finally, but by no means least, Colin Heartwell and the NIB must finally publish the initial timings and continuing nature of what are believed to be approximately $30 million in deposits of the public’s pension funds, and the ongoing nature of the relationship, with BCB TCI.

 

 Below is BCB’s press statement as issued by the London Stock Exchange News Service yesterday:

 

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=11010328

 

 

Regulatory Story
Company BCB Holdings Ltd TIDM BCB Headline Demerger of its Non-Belizean Businesses Released 12:35 19-Oct-2011 Number 4665Q12

 

 

 

RNS Number : 4665Q

 

BCB Holdings Ltd

 

19 October 2011

 

 

 

 

 

19 October 2011

 

BCB Holdings Limited

 

Demerger of its Non-Belizean Businesses

 

 

 

Belize City, Belize, 19 October 2011. BCB Holdings Limited (London - AIM: BCB; Trinidad and Tobago Stock Exchange - BCBTT; Bermuda - BBHL) today announces that the Board is proposing to BCB Holdings Shareholders that the Company be reorganised by demerging its Non-Belizean Businesses into a new holding company, Waterloo Investment Holdings Limited, which has recently been incorporated in British Virgin Islands to become the new holding company for the Non-Belizean Businesses.

 

It is intended that the Demerger will be effected by way of the declaration and payment by BCB Holdings of a dividend in kind to Qualifying BCB Holdings Shareholders, followed by a capital reduction and repayment to those Qualifying BCB Holdings Shareholders satisfied by the transfer of the Non-Belizean Businesses and the New Loan Note to WIHL, in consideration for the issue of shares by WIHL to the Qualifying BCB Holdings Shareholders and the assumption by WIHL of the obligations of BCB Holdings under the Assumed Loan Notes by way of the issue of the WIHL Debentures to the Assumed Loan Noteholders.

 

The Company will be dispatching a circular to BCB Shareholders today containing further details of the Demerger.

 

THE DEMERGER

 

The Demerger will result in BCB Holdings Shareholders holding shares in two distinct entities, which will be the holding companies of two distinct groups with separate strategic, capital and economic characteristics and management teams:

 

·     BCB Holdings, whose shares will continue to be admitted to trading on AIM, the Trinidad and Tobago Stock Exchange and the Bermuda Stock Exchange, will remain the owner of the largest banking operation in Belize, through Belize Bank, as well as international operations through BCB International.

 

·     WIHL, whose shares are intended to be traded by JP Jenkins, will become the holding company for the Non-Belizean Businesses which have large exposure to the TCI through British Caribbean Bank. WIHL will also hold the interests in Associates.

 

The Demerger will constitute a fundamental change of business of the Company which, under Rule 15 of the AIM Rules, requires approval of BCB Holdings Shareholders.   In accordance with the AIM Rules, the Company is required to send a circular to BCB Holdings Shareholders setting out the reasons for, and principal terms of, the Demerger and to seek BCB Holdings Shareholder approval for the Demerger. If the Resolution is passed, the Directors expect that, subject to the Directors considering at the Second BCB Holdings Board Meeting that the Demerger is in the best interests of the Company, the Demerger will become effective on 26 October 2011.

 

BACKGROUND TO THE DEMERGER

 

The BCB Holdings Board believes that the BCB Holdings Group currently consists of two geographically separated financial services businesses which, due to recent economic developments, have become diverse from each other and which possess very different economic drivers. Belize Bank and BCB International (which together form the principal assets of the Retained BCB Holdings Businesses) provide a comprehensive range of banking services to both retailing and commercial customers. In contrast, the business of the British Caribbean Bank group (which forms part of the Non-Belizean Businesses subject to the Demerger) focuses on the provision of lending and as such its assets are principally comprised of loans, which were in part funded by the BCB Holdings Loan Notes. These loans have a high concentration in asset backed lending to the tourism and property development sectors, which were in part funded by the BCB Holdings Loan Notes.

 

The BCB Holdings Board believes that, given the differences in both strategy and funding structure between these two financial services businesses, the BCB Holdings Group and, therefore its shareholders, would benefit from separation of these financial services businesses, which will assist each financial services business to focus on its individual strategic direction and realise its future growth potential. More specifically, the performance of the Retained BCB Holdings Businesses will continue to be closely linked to the general economic performance of Belize which has a diverse and increasingly indigenous economy with increased banking regulation and political influence in domestic  business policy, whilst the performance of the Non-Belizean Financial Services Businesses will be more closely tied to the general economic performance of the Turks & Caicos Islands which are almost exclusively dependent on the tourism industry and related service sectors.

 

In addition, BCB Holdings Group holds an aggregate interest of approximately 25 per cent in Associates which own a successful edible oil and related products business based in Costa Rica with operations in Central America. The business and performance of Associates (the shareholding in which is to be owned by the Non-Belizean Businesses) is closely tied to world demand for palm oil and the world markets for edible oil bi-products. The Board believes that these should form part of WIHL going forward, as holding this interest as an investment fits more closely with the strategy of WIHL and the medium to long term nature of its portfolio of assets.

 

The Directors believe that the Demerger will demonstrate more clearly the value of the various diverse business sectors identified above and will thereby create improved potential for an increase in value for BCB Holdings Shareholders as a whole as investors will be able to analyse more closely each group's fundamentals. The Directors believe that an informed current value of BCB Holdings is not fully reflected at present in its share price, as BCB Holdings' shares are currently valued at a discount of more than 80 per cent. to its tangible net assets based on its share price as at 13 October 2011 and the latest audited financial statements as at 31 March 2011.

 

FINANCIAL EFFECTS OF THE DEMERGER

 

In the year ended 31 March 2011, BCB Holdings Group's financial services division reported an operating loss of US$21.9 million (2010 - operating income US$12.7 million) and BCB Holdings Group reported a net loss of US$7.3 million (2010 - net income US$25.9 million), with a loss per ordinary share of US$0.07 (2010 - earnings per ordinary share US$0.27). 

 

On a pro forma basis, during this period, the Non-Belizean Financial Services businesses generated an operating loss of US$8.1 million and the assets and businesses forming the WIHL group generated net income of US$11.1 million.

 

At 31 March 2011, BCB Holdings Group reported total assets of US$1,199.5 million and net assets of US$421.3 million. On a pro forma basis, the assets and businesses forming the WIHL group represented US$564.3 million of the total assets and US$295.2 million of net assets.

 

BCB HOLDINGS BOARD AND THE BOARD OF DIRECTORS OF WIHL

 

Andrew Ashcroft and Philip Johnson will resign from the BCB Holdings Board and Cheryl Jones will become Chairman effective as at the date of the Demerger.

 

The board of directors of WIHL consist of Philip Johnson, Peter Gaze, Philip Osborne and Andrew Ashcroft.

 

RELATED PARTY TRANSACTION

 

The assumption by WIHL  of the obligations under certain of the BCB Holdings Loan Notes (the "Assumption") and the Demerger are deemed to be related party transactions pursuant to Rule 13 of the AIM Rules, because (i) WIHL and BCB Holdings share common directors; (ii) they will have the same majority shareholder; and (iii) such majority shareholder and certain directors of BCB Holdings and WIHL have consented to the Assumption.

 

The Independent Directors, having consulted with the Company's nominated adviser, Cenkos Securities plc, consider that the terms of the Assumption and the Demerger are fair and reasonable insofar as the BCB Holdings Shareholders and BCB Holdings Warrant Holders are concerned.

 

BCB HOLDINGS LOAN NOTES

 

The Company will notify the Series 1 Loan Noteholders of its intention to repay the Series 1 Loan Notes.

 

The Company has obtained from the requisite majority of Series 2 Loan Noteholders (being the holders of not less than three-quarters of the nominal amount of the Series 2 Loan Notes) consent to the amendment of the Series 2 Loan Notes such that the obligations under Series 2 Loan Notes are assumed by WIHL which will issue WIHL Debentures to the Series 2 Loan Noteholders equal to the principal outstanding and carrying the obligation to pay all accrued interest and otherwise on the same terms as the Series 2 Loan Notes. The Company will cease to have any obligations under the Series 2 Loan Notes.

 

The Series 3 Loan Noteholder and Series 4 Loan Noteholder has consented to the assumption by WIHL  of the obligations under the Series 3 Loan Notes and the Series 4 Loan Notes. WIHL will issue WIHL Debentures  to the Series 3 Loan Noteholder and the Series 4 Loan Noteholder equal to the principal outstanding and carrying the obligation to pay all accrued interest and otherwise on the same terms as the Series 3 Loan Notes and the Series 4 Loan Notes.  The Company will cease to have any obligations under the Series 3 Loan Notes and the Series 4 Loan Notes.   As a condition to the consent of the Series 2 Loan Noteholders, the Series 3 Loan Noteholder and the Series 4 Loan Noteholder to the assumption by WIHL of the obligations under their respective BCB Holdings Loan Notes, WIHL has agreed to procure that Waterloo grants security over the interests in the Associates to the Series 2 Loan Noteholders, the Series 3 Loan Noteholder and the Series 4 Loan Noteholder. The security will be granted solely for the purpose of securing the repayment of the amounts outstanding under the Series 2 Loan Notes, Series 3 Loan Notes and Series 4 Loan Notes.

 

BCB HOLDINGS WARRANTS

 

The issue and subsequent cancellation of the BCB Holdings B Shares as part of the Demerger, constitute Adjustment Events (as defined in the Warrant Instruments), under the Warrant Instruments. The BCB Holdings Board has resolved that although these two events constitute two separate Adjustment Events, the cancellation of the BCB Holdings B Shares shall be deemed to constitute the only Adjustment Event for the purposes of each of the Warrant Instruments and hereby gives notice, pursuant to clause 2.3 of the Warrant Instruments, of such Adjustment Event. The cancellation of the BCB Holdings B Shares and therefore the occurrence of the Adjustment Event is conditional on the Demerger being approved at the Second BCB Holdings Board Meeting. Following the Adjustment Event, the Directors anticipate that the Exercise Price (as defined in each respective Warrant Instrument) for each BCB Holdings Warrant will be within the range of US$1.84 and US$2.05. An announcement confirming the Exercise Price will be made on or prior to the Demerger, once the Exercise Price has been certified by the Company's auditor, pursuant to the Warrant Instruments.

 

In addition, the BCB Holdings Board has resolved to reduce the notice period for notifying BCB Holdings Warrantholders of an Adjustment Event under the Warrant Instrument from 10 Business Days to 5 Business Days.

 

GENERAL MEETING

 

The Demerger will constitute a fundamental change of business of the Company for the purpose of Rule 15 of the AIM Rules, and accordingly completion of the Demerger is conditional upon, amongst other things, BCB Holdings Shareholder approval of the Resolution being obtained at the General Meeting, notice of which is expected to be sent to BCB Shareholders later today. The Resolution requires the approval of more than 50% of the votes cast at the General Meeting.

 

For further information contact:

 

BB Holdings Limited                                      

 

Belize +501 227 7178

 

UK +44 (0)20 7248 6700

 

Cenkos Securities plc

 

Nicholas Wells / Adrian Hargrave +44 (0)20 7397 8900

 

Note: This and other press releases are available at the Company's web site:

 

http://www.bbholdingslimited.com

 

 

 

DEFINITIONS

 

AIM	AIM, a market operated by the London Stock Exchange;
AIM Rules	the AIM rules for companies as published by the London Stock Exchange from time to time
Associates	Grupo Agroindustrial CB, S.A., Tower Strategic, Ltd., Mesocafta International, S.A. and BVI International Holdings, companies operating in the edible oil and related products business sector in Central America;
Assumed Loan Notes	a Series 2 Loan Note, Series 3 Loan Note or Series 4 Loan Note;
Assumed Loan Noteholder	a holder of a Series 2 Loan Note, Series 3 Loan Note or Series 4 Loan Note;
BCB Holdings or Company	BCB Holdings Limited, an international business company incorporated in Belize under the IBCA with registered number 1;
BCB Holdings B Shares	the 100,007,864 class B ordinary shares of US$4.40 par value each in the share capital of BCB Holdings;
BCB Holdings Board	the board of directors of BCB Holdings;
BCB Holdings Group	BCB Holdings and its subsidiary undertakings from time to time;
BCB Holdings Optionholder	a holder of a BCB Holdings Option;
BCB Holdings Options	outstanding options issued pursuant to the Long Term Incentive Plan;
BCB Holdings Shareholder	a holder of BCB Holdings Shares;
BCB Holdings Shares	the 100,007,864 ordinary shares without par value in the share capital of BCB Holdings;
BCB Holdings Warrantholders	a holder of a BCB Holdings Warrant;
BCB Holdings Warrants	the outstanding warrants issued by BCB Holdings pursuant to the Warrant Instruments;
BCB Holdings Loan Noteholder	a Series 1, Series 2, Series 3, or Series 4 Loan Noteholder (as applicable);
BCB Holdings Loan Notes	the Series 1, Series 2, Series 3, and Series 4 Loan Notes;
BCB International	British Caribbean Bank International Limited;
Belize Bank	The Belize Bank Limited;
British Caribbean Bank	British Caribbean Bank Limited, a bank licensed to carry on banking business in the TCI;
Demerger	the demerger of the Non-Belizean Businesses from the BCB Holdings Group;
Directors	the directors of BCB Holdings;
Dividend Record Date	21 October 2011
Ex Dividend Date	20 October 2011
First BCB Holdings Board Meeting	the meeting of the board of directors of BCB Holdings to be held on 20 October 2011 which is to resolve on the declaration and payment of a dividend distribution, in favour of Qualifying BCB Holdings Shareholders, of 100,007,864 BCB Holdings B Shares on the basis of 1 BCB Holdings B Share for each BCB Holdings Share
General Meeting	the general meeting of BCB Holdings to be held at 8.30 a.m. on 26 October 2011 (or any adjournment thereof)
IBCA	the International Business Companies Act, 1990 of Belize (as amended);
Independent Directors	the independent directors of BCB Holdings, being the Directors other than Andrew Ashcroft, Peter Gaze, Philip Johnson and Philip Osborne;
JP Jenkins	a division of Rivington Street Stockbrokers;
London Stock Exchange	London Stock Exchange plc;
New Loan Note	the loan note to be issued by Waterloo to BCB Holdings equal to the amount of principal and accrued interest on the Series 2 Loan Note, Series 3 Loan Note and Series 4 Loan Note as at the date of the transfer of Central American Holdings to Waterloo;
Non-Belizean Businesses	the Non-Belizean Financial Services Businesses, certain off shore business interests and services and BCB Holdings' approximate 25 percent interest in the Associates;
Non-Belizean Financial Services Businesses	the non-Belizean financial services businesses of BCB Holdings which are owned by Waterloo and its subsidiaries and are proposed to be transferred to WIHL pursuant to the Demerger, the principal assets and businesses being the British Caribbean Bank and loans associated with properties located in principally in the TCI;
Qualifying BCB Holdings Shareholders	the BCB Holdings Shareholders on the share register of BCB Holdings at the Dividend Record Date;
Resolution	the resolution set out in the notice of General Meeting;
Retained BCB Holdings Businesses	the financial services businesses of BCB Holdings which are owned directly by BCB Holdings or indirectly by B.B. International Limited and are proposed to be retained by BCB Holdings following the Demerger, the principal assets and businesses being Belize Bank and BCB International;
Second BCB Holdings Board Meeting	the meeting of the board of directors of BCB Holdings to be held on 26 October 2011 which is to resolve on, amongst other things: ·     the reduction of BCB Holdings' share capital by cancellation of all the BCB Holdings B Shares; ·     the transfer of BCB Holding's shares in Waterloo to WIHL in consideration for WIHL issuing 100,007,864 ordinary shares of US$1.00 par value to the Qualifying BCB Holdings Shareholders on the basis of one share in WIHL for each BCB Holdings B Share previously held; and ·     the transfer of the New Loan Note to WIHL in consideration for WIHL assuming the obligation of BCB Holdings under the Assumed Loan Notes by way of an issue of the WIHL Debentures  to the Assumed Loan Noteholders;
Series 1 Loan Noteholder	a holder of a Series 1 Loan Note;
Series 2 Loan Noteholder	a holder of a Series 2 Loan Note;
Series 3 Loan Noteholder	a holder of a Series 3 Loan Note;
Series 4 Loan Noteholder	a holder of a Series 4 Loan Note;
Series 1 Loan Notes	US$50,000,000 10 percent fixed rate, unsecured loan notes due 2013 and issued pursuant to a loan note instrument dated 23 March 2007;
Series 2 Loan Notes	US$50,000,000 10 percent fixed rate, unsecured loan notes due 2014 and issued pursuant to a loan note instrument dated 10 October 2007;
Series 3 Loan Notes	US$57,000,000 10 percent fixed rate, unsecured loan notes due 2015 and issued pursuant to a loan instrument dated 31 March 2010;
Series 4 Loan Notes	US$60,000,000 10 percent fixed rate, unsecured loan notes due 2016 and issued pursuant to a loan instrument dated 31 March 2010;
TCI	the Turks & Caicos Islands;
Treasury Shares	the 3,635,120 ordinary shares without par value in the capital of BCB Holdings held by a subsidiary and a nominee of BCB Holdings in treasury;
United Kingdom or UK	the United Kingdom of Great Britain and Northern Ireland;
United States or US	the United States of America;
US$	the lawful currency of the United States of America;
Warrant Instruments	(i) the BCB Holdings warrant instrument dated 23 March 2007; and (ii) the BCB Holdings warrant instrument dated 10 October 2007;
Waterloo	Waterloo Capital Holdings Limited, a company incorporated in the British Virgin Islands with registered number 1628512 whose registered office is at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands;
WIHL	Waterloo Investment Holdings Limited, a BVI business company with registered number 1628508 and registered office at Craigmuir Chambers, Road Town, Tortola, British Virgin Islands;
WIHL Debentures	the  debentures to be issued by WIHL pursuant to its assumption of the obligations of BCB Holdings under the Assumed Loan Notes.

 

 

 

This information is provided by RNS

 

The company news service from the London Stock Exchange

 

 

 

END