In a move designed to limit the liability of its subsidiaries but bring significant overall benefits, beverage conglomerate, Banks DIH (BDIH) Limited has moved to create a holding company to centralize control and will have its name changed to Banks DIH Holdings Inc., (BDIHHI) pending regulatory and legal approvals.
“Under the proposed new structure, BDIHHI will become the Holding Company and in order to do so will acquire 100% of the shares issued by BDIH. This means that BDIH will become a wholly-owned subsidiary of the New Holding Company, BDIHHI. This will be done by shareholders exchanging their BDIH shares for shares in the New Holding Company BDIHI,” a booklet with the agenda for a special meeting for shareholders, set for July 15th, outlined.
According to the booklet, “Under the proposed new structure, BDIHHI will become the Holding Company and in order to do so will acquire 100% of the shares issued by BDIH. This means that BDIH will become a wholly-owned subsidiary of the New Holding Company, BDIHHI. This will be done by shareholders of BDIH exchanging their shares for shares in the New Holding Company BDIHI. In addition, the current parent company, BDIH will become a wholly owned subsidiary of the New Holding Company and the former subsidiaries will continue as such. The New Holding Company, BDIHHI, will become the ultimate parent company of those subsidiaries of BDIH,” the booklet states.
Giving a background on the proposed corporate structure, Banks DIH said that the new Holding company was created at a Board meeting in January of this year, and named Banks DIH Holdings Inc. That name had been reserved by the Registrar of Companies up until 31st January, 2023 and on 18th January, 2023, the New Holding Company by the name of Banks DIH Holdings Inc. (BDIHHI) was incorporated. The shareholders’ booklet contains copies of the incorporation and other documents. The booklet points out that current BDIH shareholders exchanging their BDIH shares for new shares in BDIHHI is one of the main steps to be taken to bring BDIHHI into operation. “…one of the main fundamental features involved in the implementation of the new BDIHHI structure is the process whereby the shareholders in BDIH will swap their shares for shares to be issued in BDIHHI. This exercise would amount to an arrangement under section 217 of the Companies Act, Cap. 89:01 and is to be effected by a 2-stage judicial process.”
The first stage would be an application to the Court for directions summoning a shareholders’ meeting and the passage of a resolution by shareholders to effect an arrangement whereby present shareholders of BDIH will swap their shares for shares in BDIHHI. Once the share swapping resolution is passed, a judicial sanction of that resolution constitutes the second stage. Unlike an Annual General Meetings (AGM) of the company, it was made clear that the agenda will focus on shareholders considering and if thought fit, approve (with or without modification) “the scheme of arrangement” as set out in a court document that outlines the application made by Banks DIH to make the outlined changes, in keeping with the Companies Act of Guyana. For persons who currently own shares in BDIH, as a result of the new structure, they will have their shares exchanged for those of BDIHHI.
“The present share certificates will be replaced by share certificates issued by BDIHHI. Those shares will carry the same value with the potential for increase as a result of the advantages likely to result from the new structure,” the company asserts.
The BDIH shares currently traded on the stock exchange are to be delisted and the BDIHHI shares issued to shareholders by BDIHHI shall be listed on the stock exchange… at the same trading price of the shares in BDIH as existed at the time of the delisting of the BDIH shares. The document states that the Holding Company is authorized to issue and allot 1.4B ordinary shares valued at a sale of $1 each and that no shares were issued by the Holding Company. The company said that there is the prospect that the value of such shares could increase as a result of the new structure created. It was noted that for structural changes to occur, necessary legal steps had to be taken. “The whole process of bringing into operation this new arrangement with respect to the Company’s present shareholders requires Court approval pursuant to Section 217 of the Companies Act. In such a forum, the Company will be required to provide to the Court…explaining the effects of this new arrangement on the Company’s shareholders,” the document stated.
“The proposed Group restructuring presents an opportunity for the Company and the Group to take advantage of the many opportunities that Guyana presents in light of the unprecedented growth that the country has been experiencing since the discovery of oil reserves. The proposed structure will position the Group so that the newly formed holding company can focus its efforts on group strategy, growth and profitability. The Company and the Group will gain agility and flexibility that will facilitate quick decision-making,” the booklet explains. An overview of the current company structure and proposed changes points out that at present, BDIH has two operating subsidiaries. They are Citizens Bank Guyana Inc., in which BDIH owns 51% of the issued capital and Banks Automotive and Services Inc. in which BDIH owns 100% of the issued capital. There is also a dormant entity by the name of Caribanks Shipping Co. Limited.
“The proposed restructuring… presents an opportunity for the Company to spin off certain business activities to subsidiaries while focusing on its core business activities. Additionally, each subsidiary will benefit from synergies associated with the delivery of central services by the newly formed holding company to the subsidiaries. As at the date of the restructuring, existing shareholders will maintain the same interest that they had immediately before the establishment of the holding company. Based on the financial forecasts, the Group remains profitable,” it adds.
“Before such steps were undertaken, transparency and good faith demand that all shareholders should he informed of the rationale for this move and the benefits to accrue from it. It is against… this background that the Company decided to hire and retain the services of an independent financial consultant. The firm chosen was BDO Eastern Caribbean and the person was Ms. Andrea St. Rose who is both a qualified accountant and an attorney-at-law,” it added. BDO was chosen, according to Banks DIH, because it is reputed to be one of the world’s leading accounting and advisory organizations, and the company gave a company profile and background into BDO.
Banks DIH registered after-tax profit of $7.58b for 2022, a 12% increase over 2021. Revenue generated by the company in 2022 was $39.6b compared to $35.8b, an increase of 10.6%. The board of directors has recommended a dividend of $2 per share unit at an overall cost of $1.7b as compared to $1.445b last year, an increase of 17.6%.
