an interview with a top RBTT official last week, I asked
for and received the directors circular pertaining
to the sale of the bank to the Royal Bank of Canada.
The document, which is over 200 pages, should be on its
way to the thousands of individuals, mutual funds, pension
plans, credit unions and companies throughout the region
who own shares of T&Ts largest bank.
For an interested RBTT shareholder like myself, the directors
circular is a gold mine of always interesting and sometimes
startling information. It seems to me that RBTT expects
its shareholders to do what shareholders have traditionally
done with shareholder documentsespecially ones as
voluminous as this one iswhich is toss it to one side
and never read it.
I urge all RBTT shareholders who are reading thisand
who have an interest in their investment in the bankto
study that directors circular the way you used to
beat your books in school.
It is important, I think, that the RBTT shareholders realise
that we own the bank and that we should accept the responsibilities
which come with ownership. The RBTT shareholders need to
understand, as well, that whether the bank gets sold or
not is entirely up to them and if they do not think the
banks future would be best served by being owned by
the Royal Bank of Canada, they have the right, collectively,
to reject the Canadian offer. I think it is up to the Royal
Bank of Canada and RBTT to convince the RBTT shareholders
that the sale of the bank is the best option.
I remain unconvinced and feel that RBTT should have properly
explored other optionssuch as disposing of its large
stake in Guardian Holdings or selling 49 per cent of the
bankbefore opting to sell.
There was one aspect of the directors circular which
I found particularly startling. On page 34, under the rubric
Investment Considerations, there is a paragraph
which reads: Some of the directors and executive officers
may have interests in the amalgamation that are different
from the interests of RBTT shareholders. These interests
may create potential conflicts of interest and cause some
of these people to view the amalgamation differently than
That statement begs certain questions as it may cast serious
aspersions on the ten RBTT directors and 16 executive officers
identified on pages 42 and 43 of the circular:
What does the statement mean?
How could some directors and executive officers of RBTT
have interests that are different from the interests
of RBTT shareholders and how will they view the transaction
In what ways are the interests of these directors and executive
officers different to the interests of the RBTT shareholders?
Dont RBTT directors and executive officers have a
responsibility to ensure that they seek the best interest
of the companys owners at all times?
Who are these directors and executive officers who may
have different interests to the RBTT shareholders?
Are the RBTT shareholders approving directors fees
for people who may have different interests
to the RBTT shareholders?
Why are they still serving on the RBTT board or working
for the bank if they may have different interests
to the owners?
Why have the RBTT chairman and CEO allowed directors and
executive officers who may have different interests
to the RBTT shareholders to continue to serve or be employed?
Is it a coincidence that the statement about different
interests is immediately followed by a sentence on the fact
that some executive officers (four) have entered into employment
agreements with RBC and some have not (12 of them)?
These are all questions which demand urgent answers. The
future of the bank, and its proposed amalgamation with RBC,
may depend on it, I feel.
20 things you need
to know about the
Guardian Holdings and Richard Azar, who are described as
principal shareholders, entered into a voting agreement
on October 1 to support the sale of RBTT. This agreement
took place on the same day that RBTT directors met and agreed
to approve the terms of the RBC acquisition proposal; (pages
4 and 19)
For the deal to
A yes vote by not less than 75 per cent of the
votes validly cast in person or by proxy at the RBTT meeting
on March 26;
If RBTT gets a better proposal for the bank and terminates
its agreement with RBC, it must pay RBC the US dollar equivalent
of $343.8 million. This is equal to 36 per cent of RBTTs
2007 profit attributable to shareholders;
If RBTT shareholders approve the deal:
RBTT shares will be delisted from the T&T, Barbados
and Jamaica stock exchanges; (page 13)
RBTT shareholders are required to surrender
for cancellation their RBTT share certificates in order
to receive the consideration from RBC; (page
This applies even if the RBTT shareholder votes against
the transaction but it is approved;
Credit Suisse valued the bank at between $32.77 and $42.13
per share. The RBTT directors agreed to accept $40 per share
from the Royal Bank of Canada;
RBTT shareholders have a right to file an action in the
High Court to have a judge determine the fair value of RBTT
Each RBTT share will be exchanged for $24 in cash and RBC
redeemable preferred shares worth about $16;
These redeemable preferred shares have to be issued and
then redeemed for RBC common shares, which can only be sold
on the New York and Toronto stock exchanges.
RBC has committed to the creation of a depository
receipt structure which would allow the trading of RBC stock
units on the local stock market. RBCs commitment is
subject to a number of factors including market demand,
regulatory approvals and tax considerations. (page
If RBCs average share price falls below US$48.98,
RBTT shareholders will receive less than $16 in equivalent
RBC shares; (page 26)
RBCs share price on Monday was US$48.75 and on Tuesday
it was US$48.19both below the US$48.98 floor of the
RBC reported a 17 per cent decline in its first-quarter
profits. The Canadian newspaper, the Globe and Mail, reported
on Friday that RBCs profits were hit by US$430 million
in pre-tax writedowns related to, among other things, US
When RBTT shareholders vote for the proposed sale, they
will not be able to determine the exact value of the RBC
shares they will receive following the amalgamation.
It is currently anticipated that RBTT shareholders will
receive their consideration for selling their
shares on or shortly after June 30. (page 22)
The bank, formerly known as RBTT, will be 100 per cent owned
RBC Holdings (T&T) Ltd. This holding company will be
owned by a holding company based in Barbados. (page 23).
RBTT shareholders who receive RBC shares will have to pay
a 15 per cent Canadian withholding tax;
Four executive officers of RBTT entered into employment
agreements with RBC: Group CEO Suresh Sookoo; David Hackett,
head of Barbados, Suriname and the Eastern Caribbean; Krishendath
Maharaj, head of group technology and Calvin Bijou, head
of group marketing.
Several top RBTT executives were not offered employment
contracts including Catherine Kumar, head of RBTTs
local bank, Merchant Bank head Lyndon Guiseppi, Nicole Richards,
corporate secretary and Paul Charles, company spokesman.