Peru, Lima: Peru's only brewer, Union de Cervecerias Backus & Johnston, has proposed a swap of its investment shares and B-class shares for a new class of non-voting preference shares in a deal worth up to $244 million, Reuters said on May 10. The company said in a statement on May 10 that the share swap was designed to establish "a share with a stable yield that can be very attractive for investors." It will have a fixed dividend, and investors will be offered a 30 percent premium for the voluntary swap, it added.

The board of Backus, which is controlled by Colombian brewer Bavaria, the fourth biggest brewer in Latin America, approved the proposal last Friday and it will be put to a shareholders meeting on June 7.

Backus makes the Cusquena, Cristal and Pilsen brands.

Backus said the terms of the offer implied a value of 1.2 soles (34 cents) per investment share and 13.2 soles ($3.8) per B-class share. Neither share had traded by late morning in Lima. The investment shares closed on Friday at 0.91 soles and the B-shares at 10.01 soles. "This implies a premium of more than 30 percent compared with the investment share and B-class share prices on the stock exchange (on Friday)," the company said in a statement.

Backus has 514 million investment shares and 17.8 million B-class shares, making the deal at the prices it outlined -- if all shareholders accepted -- worth almost 852 million soles, or $244 million. Backus also has 87.2 million A-class shares not affected by the swap proposal.

The swap would take place via a public offer and the company said it would set a minimum threshold of investment and/or B-class shares for the swap to go ahead.

Shareholders tendering their existing investment shares and B-class shares will get new non-voting preference shares and a fixed accumulative dividend, based on a percentage of the issue price and adjusted for inflation, according to a company letter submitted to stock market regulator CONASEV. The dividend will be set before the swap is launched.

The shares are expected to have a nominal value of 10 soles and an issue price of 12 soles. The swap would be made on the basis of 10 investment shares for one new preference share and 0.91 B-class shares for one preference share.

Backus said it would be able to buy back the new preference shares, in whole or in part, after three years, by paying the shareholder the issue price adjusted for inflation. ($1=3.49 soles)

UCP Backus & Johnston SA, Peru's biggest brewer, said on April 21 in a statement that the company's chairman Elias Bentin, 74, retired and was replaced by Alejandro Santo Domingo, 27, the son of Julio Mario Santo Domingo, Colombia's richest person, who took over Backus last year.

UCP Backus & Johnston SA, a unit of Bavaria Business Group, said on April 22 after the market closed that its first-quarter net income fell 82 % to $3.3 million as it reduced retail prices and sold its health insurance company. The stock traded unchanged at 97 centimos.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .