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Efforts by Republic Bank Limited (RBL) to take over Ghana’s HFC Bank have hit a major hurdle. Officials of HFC have accused the T&T bank of breaching the collaborative theme they agreed to and not complying with legal and regulatory requirements under Ghana’s laws. In a statement yesterday, RBL expressed concern about HFC’s claims, noting that in November 2012 the two sides entered into a share subscription agreement which set the framework for the local bank’s investment in the Ghana bank.
RBL said one of the terms of that agreement was that they would not increase shareholding in HFC Bank beyond 40 per cent for a period of one year without prior approval of the board of directors. “Both parties recognised that the mandatory takeover code would be triggered if Republic acquired over 30 per cent during the one year period and that the process would have to be followed. Republic’s interest in gaining majority control of HFC Bank after the one year period was also understood by all,” RBL said in its statement.
“From our initial entry into Ghana in November 2012, Republic Bank has meticulously adhered to the rules and regulations laid down by the Bank of Ghana and the Ghana Securities and Exchange Commission (SEC) and where there has been ambiguity, we have sought clarification and guidance from our Ghana advisors and the regulatory authorities.
“Correspondence to Republic Bank from the regulators has always been copied to the managing director HFC Bank so there should be no question of surprise to the board of directors. Republic Bank Limited values all its business and strategic relationships; however, at no time will the value of that relationship supersede the laws of the countries in which we are operating.
“We continue to work with the management of HFC Bank via the secondment of our staff in the Bank and participation on the Board of Directors in fulfillment of the initial intent of our arrangement and with a view to enhancing the value in HFC Bank for customers, staff and shareholders.”
RBL said it has followed the requirements of the Ghana SEC’s Code on Takeovers and Mergers and will continue to liaise regularly with that country’s authorities. Bank officials said they are committed to complying with all guidance and direction given to them. RBL added that the final decision on the matter will have to be made by shareholders and it has disassociated itself “from any action by the board of directors which would attempt to prevent or delay shareholders from their rights to make that decision”.
Last June, RBL informed the Ghana SEC of its plans to fully take over HFC Bank. It had been increasing its shares in the bank since 2012 when it made its first purchase of 8.79 per cent shares after HFC floated 112,420,246 ordinary shares under a private placement.
The T&T bank’s stake further increased to 32.02 per cent when it purchased 23.23 per cent shares previously held by Aureos Africa Fund LLC. It then acquired 7.98 percent additional shares from Union Bank of Nigeria, increasing its shareholding to the current 40 per cent. In line with the SEC Code on Takeovers and Mergers, in the second quarter of 2013, RBL made an offer to shareholders of HFC Bank. The bank also applied for a waiver from the requirement to make a mandatory takeover offer for the remaining shares.
However, the SEC turned down the waiver request.
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