Supreme Ventures (Limited) Investments

If you have been following the latest Supreme Ventures Limited (SVL) news you would now be aware that there has been a change in the ownership structure of the majority shareholder.  

Zodiac International Investments & Holdings Limited of Trinidad & Tobago has issued a US$40-million bond in Jamaica to finance its takeover of Intralot Caribbean Ventures Limited. Zodiac International Investments is now the sole owner of a Zodiac Caribbean Limited (formerly Intralot Caribbean) which owned 49.9% of SVL shares. 

However, part of the deal was that Zodiac offered up some of its SVL shares to underwriters of the note. The underwriters' had the option to convert the debt to shares in Supreme Ventures at a price of around $9.50 to $9.75 per share. Zodiac would use the proceeds of the sale of Supreme Ventures shares to pay certain expenses relating to the financing and acquisition transactions, in an amount not exceeding US$10.75 million; and to finance principal and interest due to noteholders in the event of an early repayment, said the term sheet. 

Here is where it gets interesting, the Broker for the Deal Mayberry Investments Limited through its connected Parties Mayberry West Indies Limited, Bamboo Group Holdings and Konrad Limited recently acquired a combined 12% of SVL which means that virtually Zodiac + Mayberry Owns 50% of SVL. 

Mayberry Investments now seeks to remove 7 of the existing board members including the gaming and lottery company’s chairman, Paul Hoo. The others are investment banker Peter Chin; businessman Richard Foreman; attorney-at-law John Graham; businessman Steven Hudson; telecommunications and information technology consultant Ian Moore; and accountant and former interim president and chief executive officer at SVL James Morrison.  

To be replaced with Mayberry Chairman and CEO Christopher Berry and  Gary Peart; Nicholas Mouttet, shareholder and director of Zodiac International Investments and Holdings Limited (owners of approximately 36-38 per cent of SVL shares); David McConnell, co-managing director and co-founder of Select Brands Limited; Peter McConnell, managing director of Trade Winds Citrus Limited; Ansel Howell, management consultant; and Lance Hylton, an attorney-at-law.

Now is this a hostile Takeover, 

A hostile takeover is the acquisition of one company (called the target company) by another (called the acquirer) that is accomplished by going directly to the company's shareholders or fighting to replace management to get the acquisition approved. A hostile takeover can be accomplished through either a tender offer or a proxy fight. 

The key characteristic of a hostile takeover is that the target company's management does not want the deal to go through. Sometimes a company's management will defend against unwanted hostile takeovers by using several controversial strategies, such as the poison pill, the crown-jewel defense, a golden parachute or the Pac-Man defense.

But in this case, the group of Majority Shareholders (Mayberry + Zodiac) have not targeted three board members recently appointed CEO Ann-Dawn Young Sang; Brent Sankar, who was an Intralot nominee; and Ian Levy, a founding shareholder and deputy chairman of SVL. 

Could it now be that (Mayberry + Zodiac) wish to change what has been going at the Lottery Company? A company whose value is only set to improve as long as it can maintain its game design.  An analysis of SVL will show that it has a 90% dividend payout ratio, exponentially-increasing profitability, and new lottery games which both grow its core based revenues as well as attract new revenue. 

But let us continue to watch what happens, but remember no matter what "Man will stay buy Cashpot" no matter who is in charge. 

#CollegeEconomist 

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