(Jamaica Gleaner) The Gleaner Company Limited (Gleaner) and Radio Jamaica Limited’s (RJR) shareholders voted to approve the merger of the Gleaner’s media business with RJR in separate extraordinary general meetings held in Kingston on Wednesday.
Directors from both companies urged shareholders to accept that it will result in the financial stability of the two strongest media entities in Jamaica and preserve the broad Jamaican ownership and independence of the businesses.
Gleaner Managing Director Christopher Barnes emphasised that those characteristics, along with the requisite independence, can be assured by financial sustainability.
RJR Group directors, in making their case at the extraordinary general meeting at Wolmer’s Boys’ School, indicated that the amalgamated entity would be double in value.
That meeting continued into the evening, but shareholders later approved the deal.
Shareholders were asked to vote whether to approve or reject the amalgamation of RJR with The Gleaner Company’s media businesses. Under law, half of those present plus one must vote in favour and their shareholding must equate to at least three-quarters in order to seal the deal.
No shareholder in RJR currently holds more than 10 per cent of the shares.
“Today, RJR is now valued at J$1.5 billion, but it will become a $3 billion company once finished,” Managing Director Gary Allen told shareholders.
Allen added that despite the deal diluting an individual’s shareholding by half, it will result in increased value. He said, for example, that a 10 per cent shareholding in RJR is currently worth about J$150 million and that its dilution to five per cent will still be valued at J$150 million.
“So your shares will be halved to buy the value we receive from The Gleaner,” said Chairman Lester Spaulding in response to queries from the floor.
RJR currently holds 357 million shares and The Gleaner holds 1.2 billion. RJR will expand its shares in issue through a three-for-one split and then issue bonus shares in order to equate to 1.2 billion. It would then create another 1.2 billion shares to initiate the merger of both businesses, provided shareholders accept the proposal.
“I believe that the merger will take RJR to a new plateau that would be beneficial to shareholders,” Spaulding said.
Mayberry Investments, which owns a large bloc of shares – under 10 per cent – indicated that it would neither vote for nor against the merger. It follows on information received Tuesday night, which apparently satisfied many concerns held by Mayberry on whether the merger would benefit RJR shareholders after the dilution of shares.
Mayberry wanted to know whether the merger would be accretive to shareholders, reasoned Mayberry Chief Executive Officer Gary Peart in addressing the meeting.
Barnes had earlier told shareholders at the meeting at Wolmer’s Girls auditorium that “if this meeting doesn’t approve, then the deal is dead. If this meeting approves and the RJR meeting does not approve, the deal is dead”.
Barnes reported that for the merger to be possible, the scheme of arrangement called for the injection of J$665 million in cash from The Gleaner, bumping up The Gleaner’s value from just about J$900 million to the RJR valuation of J$1.565 billion.
“The importance of that J$665 million will become more apparent when digital switchover, which is something that is mandated by governments around the world, comes into play. It is a pretty expensive venture that will have to be financed by Radio Jamaica Limited and, therefore, J$665 million goes a long way to help finance that project,” Barnes explained.
He said the merger, cash injection and the projected earnings are key elements that would bring financial sustainability.
Barnes said with the deal, there would be projected earnings of J$450 million per annum, with cost savings of J$200-300 million.
Minority shareholder Orette Staple suggested at The Gleaner’s meeting that some shareholders had been deprived of their rights to attend both meetings since both were held at the same time at different locations.
However, both Barnes and The Gleaner’s chairman, Oliver Clarke, assured shareholders that the holding of simultaneous meeting was based on a court order and that there was a process through which shareholders could vote in absentia.
At The Gleaner’s meeting, 81 persons were present and voting, while there were 219 proxy votes for a total of 290. Clarke reported that well over 50 per cent voted for the motion and that number represented 99.9 per cent of the value of their shares.
