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UPDATED October 23rd 2020
Update from Ascendant Group Website:
Hamilton, Bermuda
Ascendant Group Limited (“Ascendant”) welcomed the approvals of the Regulatory Authority (“RA”) and Minister of Finance as necessary steps in completing the sale of Ascendant to Algonquin Power & Utilities Corp. (“Algonquin”) (the “Sale”).
Ascendant Chairman Peter Durhager said: “This is welcome news and could not come at a more critical time for Bermuda. With the RA’s approval for the change of control of Bermuda Electric Light Company Limited (“BELCO”) and the Minister of Finance’s approval under Section 114B of the Companies Act 1981 granting permission for Algonquin to carry on business in Bermuda, we can complete the Sale. The sale of Ascendant to Algonquin will also assist the island and our economy to recover from the devastating impacts of COVID-19.”
Ascendant and Algonquin will now proceed with closing documentation which is expected to be completed within the coming weeks. Ascendant intends to close its share register as at the close of trading of the Bermuda Stock Exchange on Wednesday, 4th November, 2020. Shareholders will receive communication from Ascendant regarding the date and method of final payment in due course.
Algonquin’s Chief Executive Officer, Arun Banskota, noted: “Since announcing the agreement last year, we’ve been working closely with the Ascendant team and are extremely pleased to move to this next important stage. We’re excited to bring our expertise in sustainable energy solutions to the island to help move Bermuda towards a cleaner, greener energy future.”
LOM Opinion
By LOM | October 19, 2020
Over the past year Ascendant Group shares have been trading in a range around $32 on the Bermuda Stock Exchange, yielding approximately 1.4%. (Quarterly Dividend = $0.1125)
Given that current Ascendant Group shareholders will be receiving a windfall of cash in US Dollars, we would strongly recommend you speaking with a Financial Advisor to discuss your investment options in US Dollars -before to converting to Bermuda Dollars.
- Ascendant Group (parent company of Belco) is to be acquired in an all cash $36.00 per share deal by Algonquin Power
- Ascendant shares can be deposited into an LOM account at no charge.
- Shareholders will receive US Dollars on completion of the acquisition.
- Are you concerned about loss of dividend income?
Ascendant Group (parent company of “Belco”) is to be acquired in all cash USD deal by Canadian company Algonquin Power, subject to regulatory approval. Shareholders will receive USD$36.00 per share on closing of the transaction, expected later this year. Those who wish to sell and lock in profits now may encounter difficulty due to low trading liquidity. It may be in the investors best interest to wait for the completion of the acquisition, as proceeds will be delivered in US dollars rather than Bermuda dollars one would receive from the BSX. However, potential risks subsist as the deal is still pending regulatory approval, which is not always guaranteed. As interest rates remain near historic lows, shareholders should consider alternatives to simple savings accounts. Since strategic investments in the future will most likely be in foreign currencies, investors would incur a foreign exchange charge (currently 1.68%) to convert their proceeds back to US dollars.
LOM Financial Group can tailor your investments to suit your individual needs. Our award-winning mutual funds and discretionary portfolios include the USD Fixed Income Fund, which has delivered consistently positive returns, the USD Stable Income Fund, which currently pays a dividend yielding 3.29%, as well as the USD Equity Growth Fund, for investors with more risk tolerance. Ascendant shares can be deposited into an LOM account at no charge.
Contact LOM Bermuda today for more information
Find out more about the LOM Dividend Value Portfolio
Earlier this year on January 28th, the Bermudian based Ascendant Group briefly suspended trading following an announcement that they were seeking a potential buyer of the company. Months later, on June 3rd, the Board of Directors announced they had reached a decision regarding the sale of the company.
The parent company of the Belco Electric Light Company had agreed to sell the entire company, subject to shareholder and regulatory approvals, to the Canadian based company Algonquin Power in an all cash deal. Shareholders of Ascendant will receive USD$36.00 per share on closing of the transaction, scheduled for later this year. Shareholders recently approved the acquisition and regulatory approval is pending.
Most investors in the company will be satisfied with the price, seeing as the stock has climbed from an all-time low of $4.25 in March 2016 to its current market price of $30.00. Shareholders may decide to sell at the current market price to lock in a profit; however, this may prove difficult given the stock is very thinly traded (lack of liquidity). Another downside is proceeds will be settled in Bermuda dollars via the BSX, which is subject to a 1.8% exchange rate fee if one were to convert back to the greenback. Given these concerns, it may be in the shareholder’s best interest to wait for the acquisition to be completed. It should be noted however that as the deal is subject to regulatory approval, there remains the risk that it could be rejected, in which case the stock price would almost certainly fall.
Shareholders can expect to receive their sale proceeds in USD near the end of the year, yet many may be uncertain what to do with it. Some may choose to convert the proceeds into Bermuda dollars to place in a local savings account. However, with interest rates near historical lows, this provides minimal income. Strategic investments in the future will most likely be in other currencies so shareholders who choose this option will be subject to foreign currency purchase fees upwards of 1.68%.
For many shareholders of Ascendant, the annual dividend provided a consistent income stream. Now that this income generating strategy is no longer obtainable, investors may be looking for a new way of producing income. Popular alternatives to savings accounts include certificates of deposits, fixed-income funds, preferred stock, high-yield bond funds, as well as dividend income funds and portfolios.
For younger shareholders with a longer investment horizon, a capital appreciation strategy may prove more advantageous. Despite many global equity markets reaching all time highs recently, many sectors of the market still appear to have upside potential. Long term investors should not be discouraged by short term volatility, as capital appreciation in the long term will help to offset losses.
No matter which investment strategy one chooses, two things remain key; one must look to achieve a diversified portfolio as well consult with an investment manager with a proven track record.
LOM Financial Group can tailor your investments to suit your individual needs. With over 25 years of experience, investment managers at LOM have provided clients with consistent profitable results in the award-winning mutual funds offered as well as individual discretionary accounts. The LOM Fixed Income Fund USD, Bermuda’s only five-star rated fund by Morningstar, is up 4.65% YTD and has achieved consistently positive returns. The Fixed Income Fund may appeal to investors who formerly relied on the Ascendant dividend for income. For investors looking for a more dividend focused approach, the Stable Income Fund, up 13.32% YTD, may also prove viable. Younger investors with more risk tolerance may prefer the Equity Growth Fund, up 20.55% YTD (as of Q2 2019) which is designed to achieve superior capital appreciation potential over a complete market cycle.
For shareholders who wish to transfer stock into an LOM account, one just needs to complete a BSX transfer form. This process differs slightly depending on the form of ownership of the security (company vs individual).
Investors of Ascendant Group should carefully consider their options and speak with a trusted advisor today
For more information or to speak with an LOM advisor please click here
Or phone: 441 292 5000
The information contained in this article is for information purposes only, and represent the views of the author. It is not intended as specific investment or financial advice, or a recommendation or solicitation to buy or sell any security. Any investments or strategies listed in this article may not be suitable for all investors. Past performance is not indicative of future performance, and as with any investment, prices may fluctuate. It is recommended that advice is sought from a qualified investment professional prior to implementing any financial plan. LOM has made every effort to ensure that the contents herein have been compiled from sources believed reliable, however LOM does not warrant the accuracy, adequacy, timeliness, or completeness of this information expressly disclaims liability for errors or omissions in this information.
