02062019 BUSINESS

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WEDNESDAY, FEBRUARY 6, 2019

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CAPT RANDY BUTLER

Sky’s $500,000 damages battle restored by court

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net SKY Bahamas’ bid to challenge almost $500,000 in damages awarded to a rival Bahamian airline has been reinstated by the Court of Appeal.

The court, in a unanimous January 29 verdict, ruled that the carrier’s objection to the sum awarded to Southern Air as a result of a ground collision between their respective planes should be restored notwithstanding that its attorneys failed to appear for a set hearing.

The missed date was blamed on “a lapse” in procedures at the Lennox Paton law firm, and appeal justice Jon Isaacs agreed with Southern’s attorney, Gia Moxey-Lockhart, that this “fell far short of being a satisfactory explanation”.

However, he ruled: “While it is apparent that there was a breakdown in the internal communication process of [Sky Bahamas] legal advisors’ firm, we were unable to conclude that this excuse was so egregiously inadequate that the applicant should be driven from the judgment seat.”

Appeal Justice Isaacs added that the two days taken by Sky Bahamas to apply for its appeal’s reinstatement did not amount to an “inordinate delay”, and Southern advanced no argument that its case or rights had been negatively impacted by the delay.

He ruled that it was in “the interest of justice” to reinstate Sky Bahamas’ appeal, which related to the $497,954 damages awarded against it - and in Southern Air’s favour - by the Supreme Court registrar, Donna Newton, on September 25, 2017.

The damages, which were broken down into $280,540 for loss of the aircraft’s use; $141,315 for the reduction in the plane’s value; and $76,000 for repair costs, related to a June 1, 2009, accident where the two companies’ aircraft collided on the tarmac at Lynden Pindling International Airport (LPIA).

“A 1987 Beechcraft 190CC, 19-seat aircraft owned by JODA LLC and operated by [Southern] collided with [Sky Bahamas] aircraft and sustained a modicum of damage.

The applicant [Sky Bahamas] accepted liability for the incident, but disputed the respondent’s damages claim,” the Court of Appeal ruled.

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Freeport mega deal to rescue Lucayan

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

F

R E E P O RT ’ S economy “won’t look back” if Royal Caribbean’s partnership with a Mexican group to develop mega cruise berths and buy the Grand Lucayan succeeds, Tribune Business can reveal.

The cruise line’s tie-up with ITM, a developer of adventure-based theme parks and village-style destinations, was among the investment projects said to be under consideration by the Minnis Cabinet during its Freeport meeting yesterday.

The deal, which will likely have a greater economic impact that Carnival’s $100m “Grand Port” project

• Mexican group in resort/cruise tie-up • Four large berths planned for harbour • GB ‘won’t look back after this’ if it comes to fruition, would solve Freeport’s tourism woes by developing the city into a sustainable long-term destination while also taking the troublesome Grand Lucayan off the Government’s hands.

Dionisio D’Aguilar, minister of tourism and aviation, declined to comment when contacted by this newspaper about the ITM/Royal Caribbean proposal, but did not deny its existence or that it was discussed yesterday. “We were discussing a number of projects, but nothing I’m at liberty to

discuss right now,” he said.

Multiple Tribune Business sources, well-placed to know and speaking on condition of anonymity, suggested that the Cabinet discussions focused on whether to give the proposal an “approval in principle” to allow ITM to firm up its financing and potential project partners such as hotel operators.

They added that ITM, which has a strong track record of developing cruisestyle destinations in its homeland, and locations such as the Dominican Republic and Maracaibo,

ROYALFIDELITY’S president yesterday said he hopes its managementled buyout will provide a springboard for immediate Caribbean expansion and ten percent assets under management growth.

Michael Anderson, pictured, speaking after the investment bank’s purchase from Royal Bank of Canada (RBC) and its parent group was confirmed, told Tribune Business that it hoped to enter the Cayman Islands market via acquisition by the 2019 second quarter’s end.

He added that “a key objective in the next three to

five years” was for the nowindependent RoyalFidelity Merchant Bank & Trust to expand beyond its current

Lucayan managers ‘optimistic’ over payout resolution

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

that he will seek to raise $10m in debt financing “within a week” or so to cover the balance of the purchase price due to RBC and Fidelity Bank (Bahamas), the BISX-listed commercial bank, which have both agreed to sell their respective 50 percent equity stakes to RF Holdings, the vehicle created to facilitate the buyout.

The RoyalFidelity chief,

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had presented a proposal that was far superior to any other Grand Lucayan purchase offer submitted to-date.

“It’s going to be big, very big,” one source told this newspaper of ITM’s proposal. “This is going to be the start of Freeport’s turnaround. The next thing will be the harbour and the hotel. That will be within three to four months. Then we’re off to the races.

“They’re going to build four mega cruise ship berths

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• Purchase a Caribbean expansion springboard • Aiming to close Cayman deal by Q2-end • $10m raise to close RBC, affiliate deal base in The Bahamas and Barbados, transforming itself into a regional pension administration and asset management player.

Attracting clients in those sectors would also boost demand for RoyalFidelity’s other services, such as capital markets (investment funds) and estate planning products, which have all “grown consistently” in The Bahamas over the past several years.

Mr Anderson revealed

OBIE FERGUSON

A TRADE union leader yesterday said the Grand Lucayan’s managers are “optimistic” that their voluntary separation packages will be finalised shortly once the prime minister addresses their proposal.

Obie Ferguson, the Trades Union Congress (TUC) president and lead negotiator for the Bahamas Hotel Managerial Association (BHMA), told Tribune Business that a proposal had been submitted to both Dr Hubert Minnis and Dionisio D’Aguilar, minister of tourism and aviation.

He said the total value of the payout sought by around 90 BHMA members was $4.1m, close to their last offer to the Grand Lucayan’s Board, which had refused to go above $3.5m.

“We submitted our proposal and are waiting on a meeting to finalise the agreement,” Mr Ferguson said. “I resubmitted the proposal to the prime minister and minister of tourism, and we are optimistic that the matter will be resolved shortly.

“The Cabinet was meeting in Freeport today, and once they return I think all efforts will be made to pin down a meeting to finalise it. We are optimistic that the matter will be resolved.”

Mr Ferguson spoke as members of the Commonwealth Union of Hotel Services and Allied

RoyalFidelity targets 10% asset growth after buyout

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net

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Fidelity eyes ‘$7.5m-plus’ profit boost in affiliate exit

By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net FIDELITY Bank (Bahamas) will enjoy a $7.5m-plus profit “boost” for 2019 as a result of selling a 50 percent equity stake in its investment banking affiliate, it was revealed yesterday.

Gowon Bowe, pictured, the BISX-listed bank’s chief financial officer, told Tribune Business that its independent directors and advisers had determined that disposing of its ownership interest in RoyalFidelity Merchant Bank & Trust was the best way to “maximise shareholder value”.

Fidelity Bank (Bahamas) will receive $16.449m, plus half the investment bank’s undistributed earnings and retained earnings when the deal closes, in return for selling its stake as part of

• RoyalFidelity stake sale to realise over $16.449m • Seen as best way to ‘maximise shareholder value’ • ‘Child leaving nest but having to pay parent’

a management-led buyout that was approved on Monday.

Describing RoyalFidelity’s acquisition as akin to “a child leaving the nest, but having to pay the parent” to do so, Mr Bowe said its BISX-listed affiliate had decided the deal was in its best interests as it allowed

for the instant creation of shareholder value.

The deal, which will result in RoyalFidelity leaving its parent once it closes and receives the necessary regulatory approval, effectively represents the break-up of the Fidelity Group of Companies, one of the largest and best-known financial services providers in the local market.

The group was itself created by a management buyout of British American’s Bahamas-based banking interests in the mid-1990s, and RoyalFidelity’s departure means the parent, Fidelity Bank & Trust International, now retains as its main

local interest its 75 percent majority stake in Fidelity Bank (Bahamas).

While no longer members of the same financial services group, Mr Bowe said Fidelity Bank (Bahamas) would still look to its former affiliate as “the first choice” when directing clients to providers of capital markets products and wealth management services.

He added that RoyalFidelity had matured to the point where it could “fly on its own”, with independence allowing its management and new board to seize new growth opportunities and take the investment bank in their preferred direction.

“Fidelity Bank (Bahamas) 2019 results will be boosted by the sale of RoyalFidelity,” Mr Bowe confirmed to Tribune Business. “It’s difficult to say exactly until the unwinding of the undistributed profits, but effectively you’re looking at a $7.5m gain to the bottom line plus any profits earned from operations up to the date of closing.”

That date is currently projected to be early March 2019 (see other article on Page 1B), meaning that Fidelity Bank (Bahamas) will be able to book its share of the merchant bank’s profits for the 2018 full year and first months of 2019.

Describing this as an “extraordinary profit” for Fidelity Bank (Bahamas) parent and the 25 percent minority shareholders, Mr

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PAGE 2, Wednesday, February 6, 2019

THE TRIBUNE

EX-MINISTER CHALLENGES GRAND LUCAYAN VALUE

By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net A FORMER tourism minister yesterday queried whether the government is getting “value for money” over its Grand Lucayan purchase, stressing that securing the right brand was critical to

revive the resort.

Obie Wilchcombe told Tribune Business he was not surprised at the pace of the sales process, adding: “It’s unfortunate but I expected this. The government is spending a significant amount of money a week.

“I don’t think that they have disclosed the weekly

RoyalFidelity targets 10% asset growth after buyout FROM PAGE ONE who is hoping to both close the financing and obtain regulatory approval for the deal by early March 2019, confirmed that 83 percent of the investment bank will be owned by Bahamians and permanent residents. The balance will be held by Cayman-based investors.

With the transaction expanding RoyalFidelity’s staff by 23 to a total 49, Mr Anderson said the merchant bank is relocating from Frederick Street to Providence House on East Hill Street, a move it expects to occur on February 23.

While RoyalFidelity has the right to retain its existing name for three years upon the deal’s completion, he added that a new brand identity would be chosen within that timeline - although no selection had been made yet.

Describing the transaction as a “win-win” for all parties, Mr Anderson said RoyalFidelity had grown to $730m in assets under management, and “close to $2bn” in assets under administration between the two territories in which it operates.

Revealing that assets under management had grown “between ten to 15 percent per annum over the last five years”, he added that the investment bank was forecasting such expansion

rates to continue now that it is a standalone.

“We’ve forecast ten percent growth in our plan over the next three years,” Mr Anderson told Tribune Business. “I don’t think it’s that ambitious; inherent in that is the return on existing assets and new assets coming in. It’s relatively normal to have that expansion. Hopefully we can grow faster.

“We’ve seen significant growth in assets under management over the last five years, and expect to see that continue. All of the product lines are growing at a really good rate, particularly with low interest rates at the bank and people needing to find alternative investment opportunities.

“We see more and more people coming in. This market remains hungry for assets in terms of people looking for investment opportunities, and we will continue to find opportunities on their behalf. This economy is starting to pick up and do better. Not only old money seeking new channels to invest, but more money coming in. There’s a broader investor base out there.”

Once the buyout closes, Mr Anderson disclosed that it would provide a platform for Caribbean expansion with the Cayman Islands the first target. “We’re looking at some stage in the next

pay for staff. The government hasn’t told us how much money has actually been spent on the purchase.

I believe that is certainly more than $65m when all is said and done. The question, ultimately, though is are we getting value for money?”

Mr Wilchcombe added: “I’m one of those who

believed that the government should move in this direction. I don’t believe that the government needed to spend the money that we have because we should have been able to work a better deal with Hutchison.

The real question is: Are we going to get the right brand into Our Lucaya?

“That is going to be

crucial. Obviously, we are not going to make the period that they suggested.

It’s going to take several more months, which will take us to later in the year if any deal is done. The Carnival deal might help in attracting the brands you want, otherwise the government is going to have to consider how it can work

with a brand and get some skin in the game.”

The government initially set a six-month timeline from September 2018 to offload the hotel. However, that was changed and, last November, tourism minister, Dionisio D’Aguilar, said it was expected that the resort would be sold by the second quarter of 2019.

quarter to enter the Cayman market,” he told this newspaper. “We’re looking to get into the pension and wealth management business in Cayman.

“We’re finalising a transaction in Cayman at the moment, and will take that asset and expand its business to be more like what we offer through RoyalFidelity here.”

Mr Anderson did not disclose the acquisition target’s identity, but Bahamian capital markets sources, speaking on condition of anonymity, suggested it was the Cayman pensions business of its soonto-be-former parent, the Fidelity group.

Meanwhile, revealing ambitions to also expand into the eastern Caribbean, Mr Anderson said: “One of our key objectives over the next three to five years is to establish a regional pension administration and asset management business.

“We’ve grown the pension administration business over the last two years, and if we can get into Cayman that’s a good market for us. As we go into Barbados and the eastern Caribbean, we see good opportunities to expand the pension business.

“Strategically, our pension administration and asset management business brings opportunities. We see people looking for services once they know we have these products. People start with pensions and become broader clients.”

Mr Anderson said the RoyalFidelity buyout had taken 18 months to negotiate and put together, and had

an added level of difficulty because it involved talks with two separate sellers - RBC and Fidelity Bank (Bahamas), the latter of which was an affiliate company.

The deal, which will result in RoyalFidelity leaving its parent group, headed Fidelity Bank & Trust International, once it closes and receives the necessary regulatory approval, effectively represents the break-up of the Fidelity Group of Companies, one of the largest and best-known financial services providers in the local market.

The investment bank is a subsidiary being spunoff from its parent, and Mr Anderson revealed that the buyout opportunity had been presented to himself and RoyalFidelity management by shareholders of its parent who were seeking to exit their investment.

These Fidelity Bank & Trust International investors were seeking to sell-off group assets to raise cash/liquidity for their exit, thereby creating the opportunity for management to acquire Fidelity Bank (Bahamas) stake and also open talks with RBC. “It’s something that made sense at the parent level at the time, and made sense for us as a management team,” the RoyalFidelity chief said.

“Every now and again you get a win-win and solve everybody’s problems.”

Despite the split with RBC and the Fidelity group, Mr Anderson said both had “indicated a willingness to continue working with us in a partner relationship” even

though neither will be a direct investor or shareholder.

However, one capital markets source, speaking on condition of anonymity, expressed scepticism that an independent RoyalFidelity would enjoy the same success - especially without RBC as a 50 percent owner.

They argued that RBC’s commercial client base, and its status as “the government’s bank”, had been key to opening doors for RoyalFidelity to obtain government advisory and both public and private sector capital raising deals.

RBC clients typically used RoyalFidelity for such deals, and the source said: “It got them to many tables they may not have been at.” They added that the merchant bank was also heavily reliant on government advisory work and contracts.

However, Mr Anderson said RoyalFidelity’s “new shareholder base creates opportunities” to provide their companies and relationships with products and services.

He confirmed that he was now moving to raise $10m from the Bahamian capital markets to finance the balance of the purchase price now both RBC and Fidelity Bank (Bahamas) had committed to sell.

Investor commitments to finance the remainder should also now crystallise, with RoyalFidelity simultaneously working to supply all information required by the Central Bank of The Bahamas and Securities Commission - director

details, financing, capital adequacy and such like - so that the necessary regulatory approvals can be obtained.

Mr Anderson expressed hope that the financing and regulatory approvals will be completed at the same time so that the deal can close in early March 2019. He added that work on Providence House, the investment bank’s new home, was now “90-something complete”.

“I think by February 15, in a week’s time, the building will be largely complete except for the windows we’re putting in, so we expect to move in on February 23.

We’ve been retrofitting the premises since November,” he added.

RoyalFidelity’s 23-strong workforce expansion to 49 has been made necessary because it can no longer rely on the previous “shared services” agreements with other parts of the Fidelity group, requiring it to hire its own human resources manager, chief financial officer, IT and marketing managers.

Mr Anderson said the investment bank’s independence will enable staff to “add more value to the operation”, with a newly-formed employee share option plan (ESOP) making all management and staff in The Bahamas and Barbados shareholders of RF Holdings.

He added that RoyalFidelity clients would see no changes as a result of the deal, and that it would continue to be “business as usual”.

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THE TRIBUNE

Wednesday, February 6, 2019, PAGE 3

OBIE: OBAN CAUSED CARNIVAL PORT MOVE

By NATARIO MCKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net A FORMER tourism minister yesterday expressed hope that Carnival’s $100m cruise port investment will attract other investors to Grand Bahama, while lamenting the project’s relocation.

Obie Wilchcombe, who held the post under the last Christie administration, told Tribune Business: “I said before that they would have to return to the Carnival deal. It’s the same deal.

They changed the location, and I believe that’s been caused because of the Oban matter, but it’s the same deal and the same people who are involved.

“What I do not like is the fact that it has now moved out of the East End area and back into the Port area.

The East End area gave it a direct impact on the people of East End. We’re going to get the tourism value of it, but the people of East End would have been able to engage with Carnival in the creation of businesses - and direct involvement and linkages - to ensure they could benefit even more handsomely from the cruise port.

“Now it’s in the Freeport area, which means that it will be for the most part DevCo (Grand Bahama Development Company) that’s Hutchison Whampoa and the Port Authority that will be working directly with Carnival in the execution of their arrangement with them. The government’s role has been

OBIE WILCHCOMBE lessened somewhat.”

The controversial $5.5bn Oban Energies project proposes to develop an oil refinery and related petroleum product storage facilities in east Grand Bahama - the same area where Carnival agreed with the former Christie administration to locate its cruise port.

Cruise tourism facilities and oil refineries/ storage terminals are not a good mix, but the Minnis administration has yet to begin Heads of Agreement renegotiations with Oban after the latter’s project was derailed by multiple concerns surrounding its principals, its potential environmental impact and the government’s seeming lack of due diligence.

However, concerns were also expressed over whether east Grand Bahama was a suitable location for Carnival’s cruise port given the multiple environmental sensitivities associated with the location.

Fears were also voiced

BAHAMIANS turn out at a town meeting for Carnival’s $100m cruise port investment in Grand Bahama. that the port’s distance from Freeport would result in a loss of business for existing Bahamian tourism entrepreneurs, since few Carnival passengers would want to spend much time travelling back and forth, thus minimising the economic and jobs impact.

However, the revised deal moves Carnival’s port back into the Port area with a 320-acre site at Sharp Rock, close to the University of

western side to benefit, but the eastern side.

“We have the opportunity here to open up this whole east area to eco-tourism and opportunities for small business people who have been neglected or ignored.

This now gives them an opportunity to fully participate in this Grand Bahama experience.”

The Carnival cruise port project has been on the drawing board for more than a decade, covering both Christie administrations and the last Ingraham administration. It was originally set to be located at Williams Town before the last Christie administration signed the agreement to move it to eastern Grand Bahama.

The prime minister earlier this week said the relocated Carnival cruise port will create up to 1,000 jobs and become the company’s largest such facility in the world.

While addressing a Freeport town meeting to unveil the development, Dr Hubert Minnis said the economic benefits produced by

Carnival’s investment “will reverberate throughout” The Bahamas by bringing “millions more tourists” to this nation every year.

“This cruise port, which will be the largest Carnival cruise port in the world, seeks to make Grand Bahama and The Bahamas one of the best cruise destinations in the Caribbean,” the prime minister said.

“I am advised that this project promises to be one of the most technologicallyadvanced cruise ports in this region with a state-of-theart, point of sale cashless system.”

“The brand is what we wanted,” Mr Wilchcombe conceded yesterday. “The Carnival brand is a really good brand. They have proven over the years to be good corporate partners.

“That area they are seeking to develop, together with the Lucaya area, should become a very exciting area of growth and development. Carnival will open the doors and cause other investors to want to gravitate to Freeport and Grand Bahama.”

The Bahamas campus.

K Peter Turnquest, deputy prime minister and minister for finance, said the project would still benefit Grand Bahama’s eastern area - which includes his own constituents - despite its latest relocation “It is in eastern Grand Bahama, further to the city,” he said. “I’m just happy it’s on the island. Where it is located gives an opportunity for not only Freeport or the

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PAGE 4, Wednesday, February 6, 2019

THE TRIBUNE

Freeport mega deal to rescue Lucayan FROM PAGE ONE down at the [Freeport] harbour and an adventure land park. The main thing will be the hotel, and they’re going to build around the hotel.

We will have these three things going on.”

Visiting cruise ship passengers would be transported from the harbour to the Grand Lucayan and surrounding area, with other lines besides Royal Caribbean able to use the new berths.

Critically, the source said Hutchison Whampoa, which has management control and a 50 percent stake in Freeport Harbour Company, was behind the ITM proposal with both sides having seemingly reached agreement after three years

of negotiations.

“I expect the Government will have approved this,” the source added. “This is going to turn us around. Freeport won’t look back after this.

They’ve [ITM] done about six of these in Mexico now.

They’re very big.

“They’re a group that is very professional and done it all before, so they will go to work immediately. It’s very exciting. It’s going to happen very quickly. All the work is done, they’ve spent millions, and the plan is put together. They have hotel partners and any kind of partner you want. These are beautiful guys.”

Another contact, speaking on condition of anonymity, confirmed that they knew of ITM’s proposal and that it was “very substantial” in terms of including both

Sky’s $500,000 damages battle restored by court FROM PAGE ONE

Captain Randy Butler, Sky Bahamas’ chief executive, told Tribune Business that the restoration of the carrier’s appeal was “fair” and he “did not expect it any other way”.

Recalling that he had just joined Sky Bahamas when the accident occurred, he added: “It was a ground incident where the planes were parked. It wasn’t big damage; it was small damage. We took responsibility for it, were willing to fix it, and do whatever we could to assist Southern. The next day I did the flight they were supposed to do with that

plane. Everybody was shocked when the bill came back.”

Captain Butler said Sky Bahamas had suffered no loss because the claim was being dealt with by insurers, who were effectively behind the carrier’s appeal in a bid to minimise their payout.

“It was something that could have been taken care of right away,” he added. “It didn’t disrupt my business, didn’t disrupt their business.

There’s no dispute about who’s responsible and willingness to pay. We took responsibility, and insurance was willing to pay for it, from day one.

We did all we could to help even though insurance took over.”

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the harbour and Grand Lucayan.

“There’s seems to be the most viable offer yet,” they said, “in terms of cruise ships and airlift to the hotel.

They seem to have their act together and no one else has so far. What they’ve proposed is two [parks] - one at the harbour and one at the hotel.

“There’s a lot of moving parts on it that need to be tied down. We’ve got sparks, and while we haven’t lit the fire yet, at least there’s sparks. The cruise ship companies are building so many ships they have to find additional places. This is not going to take any business from anybody. It’s got to take the additional passenger load they have.”

The source added that ITM’s proposal offered the

prospect of creating critical tourism mass in Freeport, which the destination has not had for many years, while the mix of air and sealift would help combat the high Grand Bahama International Airport costs that are a frequent complaint of airlines.

“If you begin to bring in more people through the airport it makes it more viable,” they said.

Another contact argued that the ITM proposal “could be dynamite” and “the answer to the prayers a lot of people and be a latent touristic explosion for Grand Bahama. It could be the best example of disruptive creation that totally reconfigures the island’s tourism scene”.

The Government will be especially eager to announce

further good economic news for Grand Bahama, not least because it pledged to focus on revitalising the island’s economy upon taking office and during its election campaign.

It will also be keen to limit taxpayer exposure to the Grand Lucayan, which carried a $65m purchase tag and other associated costs that have continued to mount as it seeks a buyer for the property. The deadline to receive bids is February 15, with a decision on the preferred bidder due by end-March 2019.

The Government injected $45.4m into the Grand Lucayan resort, including $13m to cover its operational costs, during the six months to year-end 2018, exposing the scale of the potential drain on Bahamian

taxpayers if the government is unable to realise its goal of selling Freeport’s “anchor property” by the second quarter.

“On the equity side, developments continued to be dominated by the government’s investment in the special purpose vehicle, Lucayan Renewal Holdings, formed to acquire the Our Lucaya properties in Grand Bahama during the first quarter of the fiscal year,” the Government’s latest fiscal report said.

“For the first half of fiscal year 2018-2019 these investments totaled $45.4m—reflective of the original $32.4m in equity contribution alongside an additional $13m, for operational expenses.”

Fidelity eyes ‘$7.5m-plus’ profit boost in affiliate exit FROM PAGE ONE Bowe said the BISX-listed institution had elected to reap the benefits of its 50 percent RoyalFidelity interest now rather than over time.

Explaining that the Board’s independent directors and advisers had determined it was better to realise “the present value of future cash flows today”, he added that this was “the best opportunity to maximise shareholder value, and we believe this achieves that”.

The RoyalFidelity stake has provided a significant boost to Fidelity Bank (Bahamas) own profitability, boosting this by $2.348m and $2.105m in 2017 and 2016, respectively, and accounting for around ten percent of the bottom line in both years.

As a result, some shareholders and external observers may question the decision to exit now. Fidelity Bank (Bahamas) also received some $5.668m in

dividends from its investment banking affiliate in 2016, with the total value of its investment pegged at just over $13m a year later.

However, the $16.449m “base” that Fidelity Bank (Bahamas) is due to receive alone represents an 84.8 percent increase on the $8.9m price it paid to acquire the 50 percent RoyalFidelity interest from its parent in the first place.

“It really boils down to the sale price,” Mr Bowe said of the decision to sell.

“While you will be foregoing future profits, you are going to include in the sales price a projection of those future profits discounted for today.

“The sales price is a consideration of the profitability of the entity and value to shareholders of Fidelity Bank (Bahamas). The final recognition for this transaction is equal to projected earnings over time equivalent to the investment.

“This gives the new entity [RoyalFidelity] the opportunity to fly on its own, grow and do the things it

wants to do. Fidelity Bank (Bahamas) shareholders will have the opportunity to maximise value and, upon completion of the transaction, excess and surplus capital will be distributed to the shareholders,” he continued.

“It will be an extraordinary dividend, and give Fidelity Bank (Bahamas) shareholders the opportunity to invest in other opportunities that may come forward.”

The Fidelity Bank (Bahamas) chief financial officer added that the merchant bank’s split from its parent was a typical transaction in more developed economies, where subsidiary companies “matured to the point where they can venture off on their own” and be spun-off to generate greater value for all parties involved.

“It’s a little bit like the child leaving the nest, but in this case the child is paying the parent,” Mr Bowe told Tribune Business. “In life there’s always evolution, opportunities and new

horizons. It’s the next stage of the evolution process. It [RoyalFidelity] was birthed, grown, took on a partner, and now is going off on its own.”

He said clients of both Fidelity Bank (Bahamas) and RoyalFidelity “won’t see any change” as a result of the transaction, with both parties continuing to refer customers to each other for products/services they themselves do not offer.

“Where our customers have an interest in pensions, mutual funds, the capital markets and trusts that RoyalFidelity continues to offer, we would see them as providers of first choice,” Mr Bowe said, “knowing the structures, individuals and product lines.

“There’s still mutually beneficial opportunities that continue, and we will seek the best terms and opportunities for both sets of clients to utilise each other’s services despite not being in a subsidiary-parent relationship.”

Lucayan managers ‘optimistic’ over payout resolution FROM PAGE ONE Workers (CUHSAW), which acts for the Grand Lucayan line staff, were due to receive their voluntary separation packages this week.

Mr D’Aguilar yesterday said he was now focusing on completing talks with the BHMA after sorting out the line staff, adding: “We should commence those negotiations and bring things to a conclusion in the

PINCUS INVEST CORP. Company No. 318204 (In Voluntary Liquidation) NOTICE is hereby given pursuant to Section 204 (1)(b) of the BVI Business Companies Act, 2004 that PINCUS INVEST CORP. is in voluntary liquidation. The voluntary liquidation commenced on 4th February, 2019 and Jorge Godofredo Fassbind of Pacheco de Melo 1835, 1126 Buenos Aires, Argentina, has been appointed as the Sole Liquidator.

Dated this 4th day of February, 2019 Sgd. Jorge Godofredo Fassbind Voluntary Liquidator

DIONISIO D’AGUILAR shortest possible time.

“We’ve concluded our negotiations with the line staff and all have received their letters. The administrative process is in train

to pay them out their final amounts, and hopefully - notwithstanding any glitches - it will be done before the end of this week.”

NOTICE ZOOM LINKS INC. In Voluntary Liquidation

NOTICE ROALD INVEST & TRADE INC. In Voluntary Liquidation

Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, ZOOM LINKS INC. is in dissolution as of February 4, 2019

Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, ROALD INVEST & TRADE INC. is in dissolution as of February 4, 2019

International Liquidator Services Inc. s ituated at 3rd Floor Whitfield Tower, 4792 ConeyDrive, Belize City, Belize is the Liquidator.

LIQUIDATOR ______________________

International Liquidator Services Inc. situated at 3rd Floor Whitfield Tower, 4792 Coney Drive, Belize City, Belize is the Liquidator.

LIQUIDATOR ______________________

THE TRIBUNE

Wednesday, February 6, 2019, PAGE 5

Judge approves massive Puerto Rico debt restructuring deal SAN JUAN Associated Press A FEDERAL bankruptcy judge approved a major debt restructuring plan for Puerto Rico on Monday in the first deal of its kind for the US territory since the island’s government declared nearly four years ago that it was unable to repay its public debt.

The agreement involves more than $17bn worth of government bonds backed by a sales-and-use tax, with officials saying it will help

the government save an average of $456m a year in debt service. The deal allows Puerto Rico to cut its sales-tax-backed debt by 32 percent but requires the government to pay $32bn in the next 40 years as part of the restructuring.

Senior bondholders, who hold nearly $8bn, will be first to collect, receiving 93 percent of the value of the original bonds. Junior bondholders, many of whom are individual Puerto Rican investors and overall hold nearly $10bn, will collect last

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and recover only 54 percent.

“Puerto Rico has taken an important step toward its total financial recovery,” Gov Ricardo Rossello said in a statement. “This represents more than $400m annually that will be available for services in critical areas such as health, education, pension payments, and public safety, in compliance with other obligations.”

The deal was previously approved by bondholders but prompted hundreds of people to write and email Judge Laura Taylor-Swain, who held a hearing on the issue nearly three weeks ago, to express concerns about the government’s ability to make those payments and the effect it will have on public services. In her ruling, she wrote that she reviewed and carefully considered all those messages before making a decision.

“Many of the formal and informal objections raised serious and considered concerns about the Commonwealth’s future ability to provide properly for the citizens of Puerto Rico who depend upon it,” she wrote.

“They are not, however, concerns upon which the Court can properly act in making its decision ... the Court is not free to impose its own view of what the optimal resolution of the dispute could have been.”

The judge said that the deal represents a reasonable compromise and that further litigation would present a “significant gamble” for Puerto Rico. The island is mired in a 12-year-old recession and struggling to recover from Hurricane Maria as the government tries to restructure a portion of its more than $70bn public debt load.

A US government report issued last year said Puerto Rico’s public finance problems are partly a result of government officials who overestimated revenue, overspent, did not fully address public pension funding shortfalls and borrowed money to balance budgets.

The Government Accountability Office also reviewed 20 of Puerto Rico’s largest bond issuances over nearly two decades and found that 16 were issued solely to repay or refinance debt and fund operations, something many states prohibit.

PAGE 6, Wednesday, February 6, 2019

THE TRIBUNE

Japan finance minister Aso sorry for criticising childless

Minister floats German industry strategy, ‘champions’

JAPANESE Finance Minister Taro Aso speaks during a budget committee meeting at the lower house of the parliament in Tokyo yesterday. Aso reluctantly apologised for saying childless people are to blame for the country’s rising social security costs and its aging and declining population. Aso said yesterday that he apologised if some people found his remarks “unpleasant”.

TOKYO Associated Press JAPAN’S Finance Minister Taro Aso has reluctantly apologised for saying childless people are to blame for the country’s rising social security costs and its aging and declining population.

“If it made some people feel uncomfortable, I apologise,” Aso said yesterday after drawing complaints over a comment he made during the weekend at a seminar in Fukuoka, his constituency in southwestern Japan.

The gaffe-prone Aso, a 78-year-old former prime minister, is among conservative lawmakers in Prime Minister Shinzo Abe’s government who have at times blamed the elderly or childless for long-term demographic trends.

“There are lots of strange people who say the elderly people are to blame, but that is wrong. The problem is those who don’t have children,” he told the audience.

The comment was nearly the same as one he made in 2014 that also drew criticism. Others have made

similar comments that many found offensive. In 2007, former health minister Hakuo Yamagisawa called women “birth-giving machines”. In 2017, another senior ruling party lawmaker, Akiko Santo, said the government should consider awarding women who produced four or more children.

According to the latest government statistics, the number of births in 2018 fell to 921,000, the lowest since Japan began recording such statistics in 1899.

Japan’s total population fell by 448,000 people, a record decline, to 126 million. It is forecast to fall below 100 million by 2050, barring a huge influx of immigrants.

As of 2017, Japanese women on average gave birth to 1.43 children during their lifetimes. That compares with nearly 1.8 in the US and Britain.

Abe himself has no children. He has acknowledged that lack of access to affordable child care, excessively long working hours, elder care and other realities, especially in Japan’s biggest cities, contribute to the country’s low birthrate. But

promised labor and other reforms to help alleviate the burden on families that discourage couples from having more children have made limited headway.

Longevity in Japan is another factor behind the aging of its population and rising costs for elder care.

Aso retracted his comment when asked about it during a parliamentary session on Monday.

He apologized at a news conference following a Cabinet meeting yesterday, but said his comment was taken out of context and misunderstood.

Opposition lawmakers disagreed.

“He not only lacked consideration to those who choose not to or cannot have children, but he just doesn’t understand what the problem is,” said opposition lawmaker Kiyomi Tsujimoto, who belongs to the Constitutional Democratic Party of Japan, on Monday. “He has no sense of human rights.”

Yesterday, Aso acknowledged his tendency toward gaffes.

“I’ll have to watch what I say,” he said.

GERMAN Economy Minister Peter Altmaier presents the “National Industry Strategy 2030”, measures to secure the economic and technological leadership of Germany and the European Union in Berlin, Germany, yesterday.

BERLIN Associated Press A TOP German official yesterday floated the possibility of the government temporarily taking stakes in technology companies to head off foreign takeovers as he proposed a “national industry strategy”.

In a proposal aimed at keeping Germany competitive in a fast-changing business world, Economy Minister Peter Altmaier also backed the idea of “national and European champions”. Altmaier has long been a close ally of center-right Chancellor Angela Merkel.

Altmaier said his proposal is meant to kick-start a discussion in Germany and then in Europe on an industrial strategy to handle tough global

MARKET REPORT TUESDAY, 5 FEBRUARY 2018

t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com

BISX ALL SHARE INDEX: CLOSE 2,055.54 | CHG -5.07 | %CHG -0.25 | YTD -53.91 | YTD% -2.56 BISX LISTED & TRADED SECURITIES 52WK HI 4.50 20.91 7.50 5.39 1.60 0.56 3.68 10.20 6.60 4.85 12.50 2.74 1.78 8.21 6.30 13.20 6.99 4.47 13.50

52WK LOW 3.50 19.17 4.90 3.34 0.90 0.18 2.10 8.70 6.10 3.54 9.01 2.30 1.50 7.25 6.10 10.10 5.85 3.25 12.51

1050.00 1000.00 1000.00 1000.00

1000.00 1000.00 1000.00 1000.00

PREFERENCE SHARES

1.00 103.00 100.00 100.00 105.00 103.00 100.00 10.00 1.01

1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.00

SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Emera Incorporated Famguard Fidelity Bank Finco Focol J. S. Johnson

Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B

CORPORATE DEBT - (percentage pricing) 52WK HI 100.00

52WK LOW 100.00

SYMBOL LAST CLOSE AML 4.42 APD 17.43 BPF 7.00 BWL 5.39 BOB 1.60 BBL 0.56 CAB 2.29 CIB 9.50 CHL 6.16 CBL 4.40 CBB 10.99 CWCB 2.66 DHS 1.78 EMAB 8.76 FAM 6.30 FBB 12.85 FIN 6.98 FCL 3.62 JSJ 13.50 CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB

SECURITY Fidelity Bank Note 22 (Series B) +

SYMBOL FBB22

Bahamas Note 6.95 (2029) BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y BGS: 2015-10-3Y BGS: 2015-10-5Y BGS: 2015-10-7Y

BAH29 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330 BG0403 BG0405 BG0407

BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

104.79 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

MUTUAL FUNDS 52WK HI 2.20 4.21 2.03 182.41 158.55 1.60 1.74 1.68 1.11 6.99 8.54 6.15 10.52 11.46 10.46 10.00 8.69 11.79

52WK LOW 1.67 3.04 1.68 164.74 116.70 1.54 1.68 1.62 1.08 6.41 7.62 5.66 8.65 10.54 9.57 9.88 8.45 11.20

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.40 100.00 100.00 100.00 10.00 1.00 LAST SALE 100.00 107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

CLOSE 4.42 17.43 7.00 5.39 1.60 0.56 2.29 9.50 6.16 4.35 10.99 2.58 1.78 8.62 6.30 12.98 6.98 3.62 13.50

CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.05 0.00 -0.08 0.00 -0.14 0.00 0.13 0.00 0.00 0.00

1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.40 0.00 0.00 0.00 0.00 0.00

CLOSE 100.00

CHANGE 0.00

107.31 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund Colonial Bahamas Fund Class D Colonial Bahamas Fund Class E Colonial Bahamas Fund Class F

VOLUME

25,000

48,593

1,000

VOLUME

EPS$ 0.147 0.932 -0.306 0.323 0.085 0.000 -0.523 0.700 0.480 0.154 0.627 0.102 0.209 0.000 0.481 0.762 0.578 0.277 0.631

DIV$ 0.120 1.260 0.000 0.240 0.000 0.020 0.000 0.710 0.220 0.120 0.620 0.060 0.060 0.084 0.280 0.500 0.150 0.130 0.600

P/E 30.1 18.7 N/M 16.7 N/M N/M -4.4 13.6 12.8 28.2 17.5 25.3 8.5 N/M 13.1 17.0 12.1 13.1 21.4

YIELD 2.71% 7.23% 0.00% 4.45% 0.00% 3.57% 0.00% 7.47% 3.57% 2.76% 5.64% 2.33% 3.37% 0.97% 4.44% 3.85% 2.15% 3.59% 4.44%

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%

INTEREST Prime + 1.75% 6.95% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25% 3.50% 3.88% 4.25%

NAV 2.20 4.21 2.03 182.41 158.55 1.60 1.74 1.68 1.11 7.43 8.57 6.57 10.37 11.68 10.32 9.92 8.69 11.79

YTD% 12 MTH% 3.57% 4.03% 1.65% 1.76% 2.18% 2.45% 2.08% 3.47% 3.35% 5.94% 4.30% 4.30% 2.60% 2.60% 3.40% 3.40% 1.46% 1.46% -1.08% 1.77% -5.96% -3.05% 1.90% 4.59% 7.24% 11.96% 2.77% 3.88% 3.94% 4.69% -0.71% 0.16% 3.96% 7.75% 8.34% 14.88

MATURITY 19-Oct-2022 20-Nov-2029 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045 15-Oct-2018 15-Oct-2020 15-Oct-2022 NAV Date 30-Nov-2018 30-Nov-2018 30-Nov-2018 30-Sep-2018 30-Sep-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 31-Dec-2018 30-Nov-2018 30-Nov-2018 30-Nov-2018 30-Nov-2018 30-Nov-2018 30-Nov-2018 30-Sep-2018 30-Sep-2018 30-Sep-2018

MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings

YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful

TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225

competition, particularly from China, other Asian countries and the US. German officials and experts worry that the country, Europe’s biggest economy, risks falling behind the pace in the development of new technologies such as artificial intelligence and electric mobility.

The most eye-catching idea in Altmaier’s proposal is the concept of an “investment fund” that could as a last resort be used to protect companies that develop key technologies from being taken over. Details have yet to be thrashed out.

Altmaier told reporters that, given the government has stakes in telecommunications firm Deutsche Telekom and mail company Deutsche Post and is still the sole owner of German railway operator Deutsche Bahn, “it must also be possible for the state to participate for a limited time in high-tech companies that are at least as important for our future”.

But he also stressed that such stakes “must not lead to permanent nationalisation because the state is lousy at business”. His proposal states that buying new stakes should be balanced out by the government privatising stakes in other areas.

Altmaier pointed to the acquisition of German robotics maker Kuka by Chinese appliance manufacturer Midea in 2016 to illustrate his concerns about German tech firms being snapped up.

Altmaier’s proposal expressed concern that Germany hasn’t created

new companies of a worldleading size in recent years.

It stated that if a country lacks companies with “the necessary critical mass” to compete against big international rivals, then “this leads de facto to being shut out of a significant and growing part of the world market”.

It pointed to industrial conglomerate Siemens, Thyssenkrupp, Deutsche Bank and German automakers as examples of existing “champions”, along with European plane maker Airbus, and mentioned railways as another challenge.

Siemens and France’s Alstom hope to merge their rail operations to form a European champion backed by their countries’ governments, but European Union authorities appear skeptical about giving it antitrust clearance.

Altmaier floated the idea of giving greater weight in competition law to the global, as opposed to national or European, market.

Separately, the government already moved in December to tighten the rules on non-EU investments in areas such as the defense and telecommunications sectors, as well as the media, lowering the threshold at which it can consider blocking such plans. That partly reflected increasing concerns about Chinese investors.

Altmaier’s new proposals drew a mixed response.

Reinhard Houben, a lawmaker with the probusiness opposition Free Democrats, said they smacked of “command economy”.

NOTICE Notice is hereby given that MICHELET JEAN CHARLES of Faith Avenue, Carmichael Road, P.O.Box CR55851, New Providence, Bahamas is applying to the Minister responsible for nationality and Citizenship, for Registration/ Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written signed statement of the facts within twenty-eight days from the 6th February, 2019 to the Minister responsible for Nationality and Citizenship, P.O.Box N7147 Nassau, The Bahamas.

NOTICE Notice is hereby given that DONALD JEAN-BAPTISTE of Bacardi Road, New Providence, Bahamas is applying to the Minister responsible for nationality and Citizenship, for Registration/ Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written signed statement of the facts within twenty-eight days from the 6th February, 2019 to the Minister responsible for Nationality and Citizenship, P.O.Box N7147 Nassau, The Bahamas.

PAGE 8, Wednesday, February 6, 2019

Belgian climate minister resigns after protest march scandal BRUSSELS Associated Press A BELGIAN environment minister resigned yesterday after claiming she had confirmation from state security services that massive climate demonstrations in recent weeks were staged as a plot against her.

Though regional environment minister Joke Schauvliege initially failed to step down after admitting she had no such information from intelligence officials, she resigned after talks with her party leadership.

“I said something that was not correct,” Schauvliege said, but insisted it didn’t amount to lying.

The opposition said it was outrageous to lie and abuse the name of the state security organisation for personal purposes and also said she sought to discredit a just cause that is widely shared in the nation.

“This way, it is tough to continue on as climate minister,” she said at an emotional news conference.

Over the past two months, tens of thousands of protesters have demonstrated across Belgium for better climate protections and have often targeted Schauvliege’s policies, which they consider woefully insufficient.

At first she welcomed the marches, but over the weekend, she said “a lot of people in these marches don’t realise that they are part of a system which is a setup.”

She added that “state security has told me about this”.

In her apology, she said she overreacted because of social media criticism and lack of sleep.

Anuna De Wever, the 17-year-old driving force behind the Thursday student protests that gathered up to 30,000 demonstrators, said she was dumbfounded when she heard it.

THE TRIBUNE

Uruguay is betting on exports of medical marijuana URUGUAY Associated Press WHEN he was younger, the only thing that Enrique Morales knew about marijuana was that you smoked it to get high.

Today, the former driver is a horticulturist on a cannabis plantation about 80 miles west of the Uruguayan capital of Montevideo and he says drops of marijuana oil have been key to treating his mother’s osteoarthritis.

“My perception has now changed. It is a plant that has a lot of properties!” he said.

The company that owns the plantation, Fotmer SA, is now part of a flourishing and growing medical cannabis industry in Uruguay.

The country got a head start on competitors in December 2013 when it became the first in the world to regulate the cannabis market from growing to purchase, a move that has brought a wave of investment.

For Uruguayan citizens or legal residents over 18 years old, the law allows the recreational use, personal cultivation and sale in pharmacies of marijuana through a government-run permit system, and officials later legalised the use and export of medical marijuana to countries where it is legal.

No company has yet begun large-scale export operations, but many say selling medical cannabis oil beyond the local market of 3.3 million inhabitants is key to staying ahead of the tide and transforming Uruguay into a medical cannabis leader along with the Netherlands, Canada and Israel.

“The Latin American market is poorly supplied and is growing,” said Chuck Smith, chief operating officer of Denver,

AN EMPLOYEE of Fotmer SA, an enterprise that produces cannabis for medical use, writes down observations, inside a greenhouse in Montevideo, Uruguay yesterday. Almost six years after Uruguay grabbed international attention by becoming the first country in the world to legalise marijuana market, the small South American country is now looking to become a global leader in the sale of medicinal cannabis.

Photo: Matilde Campodonico/AP Colorado-based Dixie Brands, which recently formed a partnership with Khiron Life Sciences, a Toronto company that has agreed to acquire Dormul SA, which has a Uruguayan license to produce medical cannabis.

“Uruguay is taking a leadership position in growing high CBD, high value hemp products. So we see that as a great opportunity from a supply chain perspective,” he said, referring to the nonpsychoactive cannabidiols that are used in medical products.

Khiron has said it should be able to export medical marijuana from Uruguay to southern Brazil under regulations of the Mercosur trade bloc, marking a milestone for Uruguayan

marijuana companies focused on exports.

Fotmer, based in the small town of Nueva Helvecia, also currently employs 80 people and is investing $7m in laboratories and ten tons of crops that it hopes to ship to countries including Germany and Canada, which is struggling to overcome supply shortages in its cannabis market.

Fotmer’s 35,000 marijuana plants are sheltered in 18 large greenhouses measuring 12.5 metres by 100 metres, where workers such as Morales change into special clothing, wash their hands with alcohol and wear gloves and surgical masks to avoid any contamination.

Helena Gonzalez, head of quality control, research and development for Fotmer,

said the precautions are important in producing a quality product that can be used in medical research into the effects of cannabis products.

“Aiding that research is another of our objectives,” she said.

The first crop of prized flowers will be harvested for their cannabis oil in March.

The oil containing THC and CBD will be extracted in its labs to eventually manufacture pills, creams, ointments, patches and other treatments for cases of epilepsy and chronic pain, among other ills.

Competition is arriving as well. In December, Uruguayan President Tabare Vazquez inaugurated a $12m laboratory owned

by Canada’s International

Cannabis Corp, which aims to produce and export medicine from hemp, a variety of cannabis that contains CBDs but has no psychoactive effects.

Despite the momentum, experts say there is one key problem: Countries including Ecuador, Cuba, Panama, El Salvador and Guatemala continue to prohibit both the recreational and medicinal use of marijuana and exports of cannabis products are subject to a complex web of international regulations that is still being developed.

Marcos Baudean, a member of Monitor Cannabis at the University of the Republic of Uruguay, says another difficulty is that the South American country is competing for market share.