CIBC Role At Butterfield Queried
A Bermuda-based investment group has raised concerns about the corporate role played by the Canadian Imperial Bank of Commerce [CIBC] role in the ongoing restructuring of Bermuda’s Bank of N.T. Butterfield & Son. Ltd.
Dark Knight Strategies, which leads a group that has a major shareholding in the bank, made its concerns public in Canada’s “Financial Post” today [Feb. 15].
“Along with a group of institutions including the Carlyle Group, the CIBC became a large shareholder in the bank two years back,” reports the newspaper. “In all, those institutions invested US$550-million with CIBC investing about US$150-million via a combination of common shares and mandatorily convertible preference shares. The shares were priced at US$1.21. At the time it was said neither CIBC nor Carlyle will ‘own more than 22.8% of Butterfield’. Their ownership gave them the right to nominate two directors. The shares closed Tuesday at US$1.14.
“As part of the deal, CIBC provided Butterfield with a commitment letter for a US$500-million letter of credit. Later that commitment was reduced to US$300-million, none of which was drawn. In March 2011 it was cancelled. In its 2010 annual report, the Bank of Butterfield reported that ‘commitment and legal fees to establish a liquidity facility with CIBC’, amounted to US$7.48-million.
Last year Dark Knight wrote to CIBC expressing “serious concerns with regard to the corporate governance, the conduct of the directors, operations and management of Butterfield.”
That letter — a similar version was sent to Carlyle — was sent after the investor group wrote to the the Bank of Butterfield requesting answers to a number of questions.
“We are trying to get their board focused on the investment and on what’s being done,” said Dark Knight. “The board of CIBC has to make a decision on whether they want this to continue or whether they want to actually act the way they speak in all of their material. They are acting as if they own it.”
At least someone’s asking questions because my Government is too scared to do it. This is turing out to be a great week. Coral Beach imploding, Butterfield being called to account, Chamber of Commerce fighting…..so nice to see other folk at war for a change. Any corruption in any of this I wonder….or is this just business….
Hmmmmmmmmm
What have I missed about Coral Beach imploding? I thought it was reserved for a select few, who happen to have lots of money and enjoy exclusive company.
Read your Gazette…..
2010 -Butterfield Bank, a publicly traded company whose shares are sold and bought on the Bermuda Stock Exchange, entered into an agreement with a group of private equity investors. The Government of Bermuda borrowed more than $400 million in a private placement loan offering. They have not released that information and we, the public, do not know who or what foreign institutions hold our long-term debt.
I found this letter to the Editor – 2010 (just around the time of the bail out of the Bank by the gang of four: http://www.royalgazette.com/article/20100409/COMMENT/304099951