Dear Editor,
A letter by me published in the Stabroek News of December 11, 2016, on the decision by Banks DIH Limited to buy-back from Banks Holdings Limited, 150,138,464 shares in Banks DIH Limited provoked a four page response from Chairman and CEO, Mr Clifford Reis. As is usual for persons unwilling to deal with facts and arguments, Mr Reis went into the dangerous territory of questioning my integrity and understanding of legal documents and commercial law. He knows or ought to know me better.
Mr Reis pointedly refers to a Memorandum of Understanding entered into between Banks DIH and Banks Holdings Limited which he claims I do not understand. Forget for a moment that Banks DIH Limited has never released to shareholders a copy of that MoU. Mr Reis not only chooses to selectively and incorrectly refer to that MoU but faced with tough questions, he decided to speak of the “implied terms” and inserts into a simple, straightforward MoU words that are not there.
Mr Reis cites unnamed “legal and financial advisers” for what is a costly, damaging mistake by him and the Board of Directors he leads. The simple fact is that Banks DIH was under no obligation to repurchase any shares. Here is the relevant portion of the MoU governing the buyback of the shares.
“Banks Holdings Limited may not dispose of the shares it possesses in Banks DIH Limited as a result of this share transfer unless the first option to purchase those shares has been offered to Banks DIH Limited. The selling price of those shares shall be based on the net asset value of Banks DIH Limited as reflected in its most recent annual report or market value whichever is greater.”
It is not hard to understand that the MoU gave Banks DIH Limited a right of first refusal, not a duty to re-purchase the shares, and that the pricing formula for any possible transaction was set out in the MoU. This is no big science requiring the expertise of a major international firm; the numbers are easy to determine. The net asset value is the net book value divided by the number of shares, while the market value of the shares of a publicly traded company is the price at which the shares are traded on a recognised stock exchange, in our case GASCI.
An exception would be a case where there is a takeover bid with potential bidders trying to outdo each other for their own reasons, for example to get control of a competitor or access to backward or forward links. No such circumstance applied in the case of the Banks DIH buyback.
There was absolutely no reason for Banks DIH to buy-back the shares in the first place and worse, to engage in borrowings to pay for those shares, as Mr Reis has now admitted.
Mr Reis also admitted that the transaction was a Guyana dollar transaction and not US dollar transaction as the company had led the public to believe. He must now go the further step and tell shareholders and the public about the role, if any, of Banks DIH and its banking subsidiary in acquiring foreign currency for the transaction. Or whether Banks Holdings Limited, a Barbados company, came into Guyana, purchased twenty-six million United States dollars and transferred it to Barbados using one of the commercial banks. If that is so, those who were responsible for the purchase of US$26 million of currency either did not care or did not understand the implications of that purchase on the exchange rate of the Guyana dollar.
Finally, my response to Mr Reis’ snide remarks about misconception, seasoned commercial lawyer, misinformation, lack of knowledge and disguised reference to integrity is to recall an incident on March 5, 2003.
It arose out of a column I had done in the Sunday Stabroek (March 2, 2003) and my threat of legal action against Banks DIH Limited if it persisted with holding an improperly convened 2002-03 AGM. On March 5, Stabroek News published a letter by Mr Reis as Chairman claiming that Banks DIH had given proper notice of its AGM. Yet, during the very afternoon, I received a visit from two officials of the company offering inducements (not actual cash) if I withdrew my threat. I refused. The company then postponed the meeting, admitting improper notice.
I bear no malice or ill-will against Banks DIH Limited which I respect as an icon of the vision and entrepreneurship of Peter D’Aguiar. This share buy-back is a colossal blunder that stains the record of the company and drained it of liquidity. But I doubt the directors have the courage to admit their error.
Yours faithfully,
Christopher Ram
