Business News of 2014-06-17

Court to rule on takeover of HFC Bank on June 23

The Accra Commercial Court is expected to rule on the takeover of HFC bank by Republic Bank Limited on June 23.

The court which was presided over by His Lordship Justice George Koomson directed the first defendant/applicant, Republic Bank to file its written submission within 24 hours from today 16 June.

Upon service, the plaintiff/respondent HFC bank, and second defendant, Securities and Exchange Commission is required to file their response within 24 Hours.

HFC is seeking to place an injunction on the takeover process by Republic because they believe that the Caribbean bank is not going through the right procedure in its quest to take over the local bank.

Meanwhile, the share price of HFC Bank hit GHc1.60 last week. This is the highest since the Bank started trading on the Ghana Stock Exchange.

Investment analyst with African Alliance Derrick Mensah tells Joy Business the development can be attributed to the strong financial performance of HFC and the offer price been offered by the Republic Bank.

The Caribbean bank recently offer shareholders of HFC Bank with an offer of GH¢1.60 per share up from the initial indicative offer of GH¢1.30 pesewas.

The revised offer represents a 65 per cent premium over the mandatory price and 28 per cent above the current price of HFC that is trading at GH1.25 on the Ghana Stock Exchange, all in a bid to entice shareholders to sell their shares.

The Securities and Exchange Commission (SEC) code on takeovers and mergers requires a shareholder in a listed company whose shareholding reaches over 30 per cent to make an offer to remaining shareholders.

The Trinidad and Tobago bank applied for a waiver from the SEC for an exemption from the requirement to make a mandatory takeover offer for the remaining shares in HFC Bank to study the Ghana banking terrain.

The application for the waiver was however rejected.

In line with that, Republic Bank announced on April 17, that it would make an offer to all shareholders of HFC Bank to increase its investment in the bank.

Republic Bank first purchased 8.79 per cent shares in HFC Bank Ghana for an amount of US$8 million in December 2012, after invitations from the commercial arm of the World Bank, the International Finance Corporation (IFC).

The bank bought the stake when HFC floated 112,420,246 ordinary shares under a private placement.

Republic's stake further increased to 32.02 per cent after buying 23.23 per cent additional shares which was previously held by Aureos Africa Fund LLC.

On Friday, June 7, 2013 Republic Bank acquired 68,854,703 ordinary shares of no par value in HFC Bank Ghana Limited from Aureos Africa Fund LLC at a price of GH¢0.56 per share.

It further acquired 7.98 per cent additional shares in 2013 from Union Bank of Nigeria which increased its shareholding in the bank to the current 40 per cent. In November of 2012, Republic Bank Limited and HFC Bank (Ghana) agreed to the framework for the investment by Republic Bank in HFC Bank.

The agreement, signed on 6th November, 2012, provided that Republic Bank would not increase its shareholding in HFC Bank beyond 40 per cent for a period of one year without the prior approval of the Board of Directors.

Republic Bank Limited is one of the largest commercial banks in the English-speaking Caribbean.