Proposed mutual non-disclosure agreement on the table for consideration
Dolla Financial Services is making a bid to acquire its older competitor, Access Financial Services, with the details of the planned acquisition spelt out in a correspondence dated today (August 11) to the directors of Access.
The offer letter, which has been seen by Our Today, confirmed that Dolla Financial is interested in exploring a takeover to acquire full control of Access Financial Services Limited, based at 41b Half Way Tree Road, Kingston 5. The letter, signed by Dolla Financial’s CEO, Kadeen Mairs, “proposes that Dolla and Access enter into a mutual Non-Disclosure Agreement (NDA)”.
The NDA will provide that (i) Any information disclosed by either party may only be used for purposes of evaluating a transaction; (ii) Any mutual disclosure to the JSE and the market if and when certain terms are agreed; (iii) An exclusive due diligence and negotiation period of 30 calendar days; and (iv) Both parties agreeing to act in good faith to conclude a final transaction structure.
More details of confidential offer letter
In the confidential offer letter, Mairs states: “Given the preliminary nature of our discussions we do not think it is necessary as yet to disclose our Expression of Interest to the market, as it could cause irregular trading in either of our shares which could ultimately be detrimental to the successful completion of negotiations and erode the value of both of our shareholders.”
The Dolla Financial CEO asked that the Access Financial Board of Directors “confirm within five calendar days from the date hereof that the majority of the Board is not opposed to our Expression of Interest and that you will engage in discussions in relation to formulating a mutually acceptable NDA”.
Mairs emphasises that, “although our evaluation of a potential transaction is still at a preliminary stage including such material matters including offer price and transaction structure (whether by way of a takeover bid offer or take-over scheme of arrangement) we strongly believe that confidential exploratory discussions will allow both Dolla and Access to formulate transaction terms that will be of mutual benefit to both Dolla and Access shareholders”.
He believes that there are significant synergies that can be realised by a business combination between Dolla and Access, noting that Dolla will benefit from the 10-year tax concessionary regime from being listed on the Junior Market.
When contacted, both Dolla Chairman Ryan Reid and Mairs had no comment on the matter.
Dolla recently listed on the Junior Market of the Jamaica Stock Exchange, having had a successful initial public offer of shares, which was heavily oversubscribed in June, pulling in subscription of $5 billion for the $500 million worth of shares on offer, priced at $1 per share.
Dolla Financial has a loan portfolio that has grown by a compound annual growth rate of 68 per cent between 2017 to the first quarter of 2022. It has eight locations across Jamaica and one in Guyana. Access Financial Services Limited was established in 2000 and was listed on the Junior Market of the Jamaica Stock Exchange in 2009.
Access is one of the leading providers of personal and business loans to Jamaica’s micro-finance sector. Access Financial operates through an islandwide retail network of 18 branches and also has a subsidiary in the United States.