Readymix (West Indies) Ltd minority shareholder Peter Permell has won his legal challenge over the share price offered by Trinidad Cement Limited (TCL) when it acquired a majority stake in the company in 2017.
Delivering a judgement at the Hall of Justice in Port-of-Spain, yesterday morning, High Court Judge, Eleanor Donaldson-Honeywell, ruled that the fair market value of the shares was $13.42 as opposed to the $11 or US$1.62 originally offered by TCL.
The share price set by Donaldson-Honeywell only applies to the 26,400 shares owned by Permell as he was the only minority shareholder who opted to challenge TCL’s offer.
According to the evidence in the case, when TCL began the take over in March 2017, it held 8,531,977 shares or a 71.1 per cent stake in the company.
Fifty-three of the company’s 496 minority shareholders including Clico, RBC Trust, Unit Trust Corporation (UTC) and Republic Bank Limited took up TCL’s offer.
Following the close of the bid, 39 other minority shareholders offered a further 1,577,207 shares, leaving TCL with over 90 per cent share of the company.
Under the T&T Securities and Exchange Commission Take-Over By-Laws, the company was required to offer to buy-out the remaining shareholders including Permell, who later decided to challenge the share price offered by TCL.
At a preliminary stage in the case, the parties had legal arguments on which of them should be required to pay for an independent valuation of the company required to determine the fair market value of the shares.
Donaldson-Honeywell eventually ordered that TCL foot the bill.
Donaldson-Honeywell’s assessment of the fair market price of the shares was based solely on the independent valuation the court eventually received.
As a secondary issue in the case, Permell was asking the court to order interest to be paid on the valuation, which took effect from the date of the filing of the lawsuit.
As Donaldson-Honeywell disagreed with the contention, she only ordered TCL to pay 75 per cent of Permell’s legal costs for bringing the lawsuit.
In a brief interview after the judgement was delivered, Permell said he was pleased as the case set a legal precedent for local and regional mergers and acquisitions.
He claimed that TCL had initially attempted to settle the case but he decided to take it to trial for there to be a judicial determination on the issue.
“I really did this because the jurisprudence in the area is scarce...This is a small victory for me but a large one for minority shareholders not just here but for the whole Caribbean,” Permell said.
Permell was represented by Ronnie Bissessar and Varin Gopaul-Gosine, while Catherine Ramnarine and Miguel Vasquez represented TCL.