FCIBJ to be delisted. Significant payout for minority shareholders.

First Caribbean International Bank (Jamaica) Limited (FCIBJ) is considering delisting from the Jamaican Stock Exchange (JSE) as early as December 30, 2011 if the JSE approves its request.

In a statement to the Jamaica Stock Exchange on November 15, 2011, FCIBJ did not state their reason for such a move, but highlighted however that they would be willing to pay the 52-week high price of $13.25 for each share if the move was approved. The share (which did not trade today Tuesday November 15, 2011), last traded at $6.50, and this would see FCIBJ paying $6.75 on top of the $6.50 value, a whopping 104% of the current price per share. The current asking price is $9.35.

FCIBJ on the JSE Website November 15, 2011

Trading Activity

FCIBJ Trading Activity

There may well be a plausible reason for the share to be delisted however as FCIBJ may be gaining little from being on the Jamaica Stock Exchange. They have seen the average close price of the share fall from a high of $13.28 in Decmeber 2010 to a low of $6.50 as at November 15, 2011. It has pretty much remained constant or declined every month.

Additionally, the stock has only been traded 16 days between December 2010 to November 15, 2011 with the last day being November 4, 2011. On top of that, of the 265 million shares available the highest volume traded on those 16 days was a paltry 27,996.

There are significant costs and responsibilities to being a publicly listed company.

Their statement to the JSE read

The Board of Directors of First Caribbean International Bank (Jamaica) Limited (FCIBJ) has today requested that the Board of the JSE exercise its discretion under rule 411A of the JSE Rules to delist the ordinary shares of FCIBJ with effect from close of business on December 30, 2011.  If the Board of the JSE exercises its discretion to delist the shares FCIBJ plans to afford minority shareholders the opportunity of disposing of their shares by purchasing for cancellation, such shares as are offered to it, up to December 29, 2011 at a fixed price of not less than $13.25 (52-week high).

Should most JSE companies delist as consultant suggests?

Despite the poor showing however, their move may be a good one, and in line with what one consultant recently suggested. The Jamaica Observer reported earlier this year that Anura Jayatillake a Deloitte partner presenting at a Conference stated

“Many of these 38 traded stocks are earning record profits but … that they would have earned higher returns were assets invested in government paper.”

The April 2011 article suggested that “NEARLY three-quarters of the listed companies on the Jamaica Stock Exchange (JSE) should consider delisting or merging to maximise shareholder value…”

UPDATE: (Nov 18, 2011) First Caribbean International Bank (Jamaica) Limited has been advised that the Board of the Jamaica Stock Exchange (JSE) has determined that the
ordinary shares of the Bank shall be delisted from the Exchange with effect from the close of business on Friday, December 30, 2011.

In order to enable minority holders of the ordinary shares to dispose of their shares before the delisting if they wish to do so, the Bank intends, in accordance with section 58 of the Companies Act and Rule 413 of the JSE Rules, to buy back ordinary shares for cancellation at the fixed price of $13.25 each from minority holders who wish to sell their shares to the Bank up to December 27, 2011. Letters to the minority holders of the ordinary shares
containing details of the delisting and the process, including the manner in which acceptances should be made will be issued shortly.