19 October 2011

BCB Holdings Limited

Demerger of its Non-Belizean Businesses

Belize City, Belize, 19 October 2011. BCB Holdings Limited (London - AIM: BCB; Trinidad and Tobago Stock Exchange - BCBTT; Bermuda - BBHL) today announces that the Board is proposing to BCB Holdings Shareholders that the Company be reorganised by demerging its Non-Belizean Businesses into a new holding company, Waterloo Investment Holdings Limited, which has recently been incorporated in British Virgin Islands to become the new holding company for the Non-Belizean Businesses.

It is intended that the Demerger will be effected by way of the declaration and payment by BCB Holdings of a dividend in kind to Qualifying BCB Holdings Shareholders, followed by a capital reduction and repayment to those Qualifying BCB Holdings Shareholders satisfied by the transfer of the Non-Belizean Businesses and the New Loan Note to WIHL, in consideration for the issue of shares by WIHL to the Qualifying BCB Holdings Shareholders and the assumption by WIHL of the obligations of BCB Holdings under the Assumed Loan Notes by way of the issue of the WIHL Debentures to the Assumed Loan Noteholders.

The Company will be dispatching a circular to BCB Shareholders today containing further details of the Demerger.

THE DEMERGER

The Demerger will result in BCB Holdings Shareholders holding shares in two distinct entities, which will be the holding companies of two distinct groups with separate strategic, capital and economic characteristics and management teams:

·     BCB Holdings, whose shares will continue to be admitted to trading on AIM, the Trinidad and Tobago Stock Exchange and the Bermuda Stock Exchange, will remain the owner of the largest banking operation in Belize, through Belize Bank, as well as international operations through BCB International.

·     WIHL, whose shares are intended to be traded by JP Jenkins, will become the holding company for the Non-Belizean Businesses which have large exposure to the TCI through British Caribbean Bank. WIHL will also hold the interests in Associates.

The Demerger will constitute a fundamental change of business of the Company which, under Rule 15 of the AIM Rules, requires approval of BCB Holdings Shareholders.   In accordance with the AIM Rules, the Company is required to send a circular to BCB Holdings Shareholders setting out the reasons for, and principal terms of, the Demerger and to seek BCB Holdings Shareholder approval for the Demerger. If the Resolution is passed, the Directors expect that, subject to the Directors considering at the Second BCB Holdings Board Meeting that the Demerger is in the best interests of the Company, the Demerger will become effective on 26 October 2011.

BACKGROUND TO THE DEMERGER

The BCB Holdings Board believes that the BCB Holdings Group currently consists of two geographically separated financial services businesses which, due to recent economic developments, have become diverse from each other and which possess very different economic drivers. Belize Bank and BCB International (which together form the principal assets of the Retained BCB Holdings Businesses) provide a comprehensive range of banking services to both retailing and commercial customers. In contrast, the business of the British Caribbean Bank group (which forms part of the Non-Belizean Businesses subject to the Demerger) focuses on the provision of lending and as such its assets are principally comprised of loans, which were in part funded by the BCB Holdings Loan Notes. These loans have a high concentration in asset backed lending to the tourism and property development sectors, which were in part funded by the BCB Holdings Loan Notes.

The BCB Holdings Board believes that, given the differences in both strategy and funding structure between these two financial services businesses, the BCB Holdings Group and, therefore its shareholders, would benefit from separation of these financial services businesses, which will assist each financial services business to focus on its individual strategic direction and realise its future growth potential. More specifically, the performance of the Retained BCB Holdings Businesses will continue to be closely linked to the general economic performance of Belize which has a diverse and increasingly indigenous economy with increased banking regulation and political influence in domestic  business policy, whilst the performance of the Non-Belizean Financial Services Businesses will be more closely tied to the general economic performance of the Turks & Caicos Islands which are almost exclusively dependent on the tourism industry and related service sectors.

In addition, BCB Holdings Group holds an aggregate interest of approximately 25 per cent in Associates which own a successful edible oil and related products business based in Costa Rica with operations in Central America. The business and performance of Associates (the shareholding in which is to be owned by the Non-Belizean Businesses) is closely tied to world demand for palm oil and the world markets for edible oil bi-products. The Board believes that these should form part of WIHL going forward, as holding this interest as an investment fits more closely with the strategy of WIHL and the medium to long term nature of its portfolio of assets.

The Directors believe that the Demerger will demonstrate more clearly the value of the various diverse business sectors identified above and will thereby create improved potential for an increase in value for BCB Holdings Shareholders as a whole as investors will be able to analyse more closely each group's fundamentals. The Directors believe that an informed current value of BCB Holdings is not fully reflected at present in its share price, as BCB Holdings' shares are currently valued at a discount of more than 80 per cent. to its tangible net assets based on its share price as at 13 October 2011 and the latest audited financial statements as at 31 March 2011.

FINANCIAL EFFECTS OF THE DEMERGER

In the year ended 31 March 2011, BCB Holdings Group's financial services division reported an operating loss of US$21.9 million (2010 - operating income US$12.7 million) and BCB Holdings Group reported a net loss of US$7.3 million (2010 - net income US$25.9 million), with a loss per ordinary share of US$0.07 (2010 - earnings per ordinary share US$0.27). 

On a pro forma basis, during this period, the Non-Belizean Financial Services businesses generated an operating loss of US$8.1 million and the assets and businesses forming the WIHL group generated net income of US$11.1 million.

At 31 March 2011, BCB Holdings Group reported total assets of US$1,199.5 million and net assets of US$421.3 million. On a pro forma basis, the assets and businesses forming the WIHL group represented US$564.3 million of the total assets and US$295.2 million of net assets.

BCB HOLDINGS BOARD AND THE BOARD OF DIRECTORS OF WIHL

Andrew Ashcroft and Philip Johnson will resign from the BCB Holdings Board and Cheryl Jones will become Chairman effective as at the date of the Demerger.

The board of directors of WIHL consist of Philip Johnson, Peter Gaze, Philip Osborne and Andrew Ashcroft.

RELATED PARTY TRANSACTION

The assumption by WIHL  of the obligations under certain of the BCB Holdings Loan Notes (the "Assumption") and the Demerger are deemed to be related party transactions pursuant to Rule 13 of the AIM Rules, because (i) WIHL and BCB Holdings share common directors; (ii) they will have the same majority shareholder; and (iii) such majority shareholder and certain directors of BCB Holdings and WIHL have consented to the Assumption.

The Independent Directors, having consulted with the Company's nominated adviser, Cenkos Securities plc, consider that the terms of the Assumption and the Demerger are fair and reasonable insofar as the BCB Holdings Shareholders and BCB Holdings Warrant Holders are concerned.

BCB HOLDINGS LOAN NOTES

The Company will notify the Series 1 Loan Noteholders of its intention to repay the Series 1 Loan Notes.

The Company has obtained from the requisite majority of Series 2 Loan Noteholders (being the holders of not less than three-quarters of the nominal amount of the Series 2 Loan Notes) consent to the amendment of the Series 2 Loan Notes such that the obligations under Series 2 Loan Notes are assumed by WIHL which will issue WIHL Debentures to the Series 2 Loan Noteholders equal to the principal outstanding and carrying the obligation to pay all accrued interest and otherwise on the same terms as the Series 2 Loan Notes. The Company will cease to have any obligations under the Series 2 Loan Notes.

The Series 3 Loan Noteholder and Series 4 Loan Noteholder has consented to the assumption by WIHL  of the obligations under the Series 3 Loan Notes and the Series 4 Loan Notes. WIHL will issue WIHL Debentures  to the Series 3 Loan Noteholder and the Series 4 Loan Noteholder equal to the principal outstanding and carrying the obligation to pay all accrued interest and otherwise on the same terms as the Series 3 Loan Notes and the Series 4 Loan Notes.  The Company will cease to have any obligations under the Series 3 Loan Notes and the Series 4 Loan Notes.   As a condition to the consent of the Series 2 Loan Noteholders, the Series 3 Loan Noteholder and the Series 4 Loan Noteholder to the assumption by WIHL of the obligations under their respective BCB Holdings Loan Notes, WIHL has agreed to procure that Waterloo grants security over the interests in the Associates to the Series 2 Loan Noteholders, the Series 3 Loan Noteholder and the Series 4 Loan Noteholder. The security will be granted solely for the purpose of securing the repayment of the amounts outstanding under the Series 2 Loan Notes, Series 3 Loan Notes and Series 4 Loan Notes.

BCB HOLDINGS WARRANTS

The issue and subsequent cancellation of the BCB Holdings B Shares as part of the Demerger, constitute Adjustment Events (as defined in the Warrant Instruments), under the Warrant Instruments. The BCB Holdings Board has resolved that although these two events constitute two separate Adjustment Events, the cancellation of the BCB Holdings B Shares shall be deemed to constitute the only Adjustment Event for the purposes of each of the Warrant Instruments and hereby gives notice, pursuant to clause 2.3 of the Warrant Instruments, of such Adjustment Event. The cancellation of the BCB Holdings B Shares and therefore the occurrence of the Adjustment Event is conditional on the Demerger being approved at the Second BCB Holdings Board Meeting. Following the Adjustment Event, the Directors anticipate that the Exercise Price (as defined in each respective Warrant Instrument) for each BCB Holdings Warrant will be within the range of US$1.84 and US$2.05. An announcement confirming the Exercise Price will be made on or prior to the Demerger, once the Exercise Price has been certified by the Company's auditor, pursuant to the Warrant Instruments.

In addition, the BCB Holdings Board has resolved to reduce the notice period for notifying BCB Holdings Warrantholders of an Adjustment Event under the Warrant Instrument from 10 Business Days to 5 Business Days.

GENERAL MEETING

The Demerger will constitute a fundamental change of business of the Company for the purpose of Rule 15 of the AIM Rules, and accordingly completion of the Demerger is conditional upon, amongst other things, BCB Holdings Shareholder approval of the Resolution being obtained at the General Meeting, notice of which is expected to be sent to BCB Shareholders later today. The Resolution requires the approval of more than 50% of the votes cast at the General Meeting.

For further information contact:

BB Holdings Limited                                      

Belize +501 227 7178

UK +44 (0)20 7248 6700

Cenkos Securities plc

Nicholas Wells / Adrian Hargrave +44 (0)20 7397 8900

Note: This and other press releases are available at the Company's web site:

http://www.bbholdingslimited.com

DEFINITIONS