Glenn Titterton, President & Chief Executive Officer, explained that BF&M Limited issued the Preference Shares in 1991 and that for the past ten years they had provided a sound investment opportunity for the community with a high rate of return. He said that there were 2,492,000 Preference Shares currently issued and which would now be converted in accordance with the bye-laws of the Company, as reproduced in the Prospectus for the Preference Shares dated 20th September 1991. He said that while the intention in 1991 was that conversion would be on a 1 for 1 basis, two subsequent 1 for 10 Common Share stock dividends meant that the holders of Preference Shares would now receive 1.21 Common Shares in the Company for each Preference Share held.
Mr. Titterton said that, without any further changes, the conversion of the Preference Shares would benefit the Company because the level of dividends payable would reduce, thus further strengthening Shareholders Equity over a period.
It is interesting to review this development with reference to recent trading in the Company's shares on the Bermuda Stock Exchange (the "BSX"). Over the past month Preference Shares have traded in a range between $12.75 and $13.25. For each such Preference Share a holder will receive 1.21 Common Shares, which have traded between $11.00 and $12.50 over the same period. As an example a holder of 100 Preference Shares with a market value over the past month of between $1,275 and $1,325 will receive 121 Common Shares with a market value over the same period of $1,331 to $1,512.50. Looking forward, it is important to remember that market value will be determined by future trading on the BSX.
Mr. Titterton noted that the holders of Common Shares currently receive a dividend of $0.48 per share per annum and that the Company issued a 1 for 10 Stock Dividend in May 2002. At the time of writing the number of issued Common Shares after conversion of the Preference Shares is expected to be 6,669,855.
"This is a further positive step in BF&M's development. While we wrestle with the challenges posed by deteriorating loss experience in some lines of business and a difficult investment climate, our core business remains strong. Our human resource and systems initiatives, particularly web based real-time facilities, are helping to position the Company well for the future. Other developments such as the recently announced Networking Agreement with Sun Life Financial along with the start of demolition for the new office building being constructed by Barr's Bay Properties Limited on Pitts Bay Road point to further progress. We move forward with considerable confidence", Mr. Titterton added.