Big bank finds re­gional buyer for re­gional as­set

CIBC to sell FirstCarib­bean stake for $797M (U.S.)

Stockwatch Daily - - FRONT PAGE - Mr. Shawn Be­ber re­ports

CANA­DIAN IM­PE­RIAL Bank of Com­merce has reached an agree­ment to sell a sig­nif­i­cant por­tion of its ma­jor­ity stake in CIBC FirstCarib­bean to GNB Fi­nan­cial Group Ltd. Un­der the terms of the agree­ment, GNB is ac­quir­ing 66.73 per cent of FirstCarib­bean shares from CIBC for to­tal con­sid­er­a­tion of $797-mil­lion (U.S.), which rep­re­sents a com­pany valu­a­tion of ap­prox­i­mately $1,195,000,000 (U.S.), sub­ject to clos­ing ad­just­ments to re­flect cer­tain changes in FirstCarib­bean’s book value prior to clos­ing. “We con­tinue to build a re­la­tion­ship-ori­ented bank for a mod­ern world and this strate­gic trans­ac­tion will sharpen our fo­cus on our core busi­nesses,” said Shawn Be­ber, se­nior ex­ec­u­tive vice-pres­i­dent of gen­eral coun­sel and cor­po­rate de­vel­op­ment at CIBC. “FirstCarib­bean is a well-per­form­ing busi­ness and we be­lieve this trans­ac­tion will sup­port its long-term growth prospects, while cre­at­ing value for its stake­hold­ers, as well as those of CIBC. As an in ves tor in FirstCarib­bean, we in­tend to work closely with GNB Fi­nan­cial Group to sup­port con­tin­ued growth for the busi­ness.” “FirstCarib­bean will re­main the strong en­tity it is to­day, com­mit­ted to ser­vic­ing its cli

ents in the re­gion,” said Jaime Gilin­ski, chair­man of GNB Fi­nan­cial Group. “I have been im­pressed by the strength and sta­bil­ity of FirstCarib­bean and am ex­cited about its prospects for the fu­ture.” GNB is wholly owned by Star­mites Corp. SARL, the fi­nan­cial hold­ing com­pany of the Gilin­ski Group. The Gilin­ski Group has bank­ing op­er­a­tions in Colom­bia, Peru, Paraguay, Panama and Cay­man Is­lands, with ap­prox­i­mately $15-bil­lion (U.S.) in com­bined as­sets.

The to­tal con­sid­er­a­tion com­prises ap­prox­i­mately $200-mil­lion (U.S.) in cash and se­cured fi­nanc­ing pro­vided by CIBC for the re­main­der. Fol­low­ing the close of the trans­ac­tion, CIBC will re­main a 24.9-per-cent mi­nor­ity share­holder of FirstCarib­bean and will ben­e­fit from var­i­ous mi­nor­ity share­holder pro­tec­tions, as well as liq­uid­ity rights in re­spect of its mi­nor­ity stake.

CIBC’s com­mon eq­uity Tier 1 cap­i­tal ra­tio is ex­pected to im­prove by over 40 bps on clos­ing. The trans­ac­tion is ex­pected to re­sult in an af­ter-tax loss of ap­prox­i­mately $135-mil­lion that will be rec­og­nized in the fourth quar­ter of 2019, rep­re­sent­ing a re­duc­tion of the car­ry­ing value of good­will re­lated to FirstCarib­bean. Upon clos­ing, CIBC will re­al­ize ac­cu­mu­lated for­eign cur­rency trans­la­tion gains re­lat­ing to FirstCarib­bean, es­ti­mated to be ap­prox­i­mately$280-mil­lion based on ex­change rates as of Oct. 31, 2019, and will also rec­og­nize the im­pact of any clos­ing ad­just­ments and its mi­nor­ity stake.

The agree­ment is ex­pected to be com­pleted in 2020, sub­ject to sat­is­fac­tion of cus­tom­ary clos­ing con­di­tions, in­clud­ing re­ceipt of reg­u­la­tory ap­provals, and both CIBC and GNB are work­ing closely to en­sure a smooth tran­si­tion for clients and team mem­bers.

We seek Safe Har­bor.

Karen Bax­ter con­densed this news re­lease ([email protected]­watch.com).

Brent Stan­ley Belzberg, Nanci Ellen Cald­well, Michelle L Collins, Pa­trick Darold Daniel, Luc Des­jardins, Vic­tor Ge­orge Dodig, Linda S Hasen­fratzGuelp­h, Kevin James Kelly, Chris­tine E Larsen, Ni­cholas D’Orr Le Pan, John Paul Man­ley, Jane Les­lie Pev­erett, Katharine Berghuis Steven­son, Mar­tine Tur­cotte, Barry L Zubrow

(CM) Shares: 445,248,810

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