THE TRIBUNE
Tuesday, July 12, 2016, PAGE 5
Govt ‘out of’ new mobile operator by early September From pg B1 had ensured HoldingCo was “fully funded” through its initial start-up phase. HoldingCo, which will eventually be renamed, is the vehicle that will own the majority 51.75 per cent equity interest in NewCo 2015, the Bahamas’ newlylicensed second mobile operator. It will be partners with fellow NewCo 2015 shareholder, Cable Bahamas, which despite owning a minority 48.25 per cent, has Board and management control after defeating all rivals to win the second licence. Mr Bowe explained that the Christie administration had only stepped in as HoldingCo’s owner on an interim basis, both to ensure that NewCo’s launch and infrastructure roll-out are not delayed, and that it could finance its share of the associated costs. The initial mobile/cellular liberalisation request for proposal (RFP) allows the Government to step in as HoldingCo’s initial owner if private capital is unwilling to become equity investors in the company. Such a scenario has oc-
curred, with Mr Bowe explaining that - while interested - institutional investors had provided feedback saying they could not commit without first assessing NewCo’s business plan and its projected financial performance. “It was difficult to get institutional investors interested with no financial information,” the PwC partner said simply. “That was recognised, in terms of the lack of financial information, so we were not going to push that envelope. We knew we needed financial data and financial information. The final leg was the financial plan for NewCo.” That was not available until NewCo’s recent incorporation and set-up, meaning it was impossible for potential investors to do the desired due diligence. “I would say that by the end of the month, the final PPM and opening should be in progress,” Mr Bowe told Tribune Business of the offering. “We’d like the investment groups to be mulling over it, and make a decision, in the month of August. The aim is to have it [the PPM] out in early August, so by the
beginning of September the offering will be closed down and the cash flowing in, removing the Government shareholding.” While the total sum sought by the private offering “can’t be disclosed at this time”, Mr Bowe said that based on investor feedback to-date “we think we will get the full proceeds to get the Government out”. “Any placement agent and underwriter will tell you that until they see the signature on the dotted line, you never know what you’re going to raise,” he added. “But there are limited investment opportunities in the Bahamas for diversification, and this particular opportunity, which is an opportunity to invest in the assets of the country, is particularly appealing. “The exercise with HoldingCo is now going to move to the final stages. The PPM has been drafted; it has not been finalised. It has been put out for comment by institutional investors,” Mr Bowe continued, suggesting this process would be completed in the next two weeks. “The target audience have been canvassed already. They’d expressed an interest, and were awaiting financial information to do due diligence and get information for their trustees
and investment committees, so they could be confident that it was a sound investment and good for cash flow.” The PwC partner said launching the PPM rapidly was a priority, given that HoldingCo did not want to have to compete with rival investment offerings that could come to market. “We’re working fast to get the PPM in progress,” Mr Bowe told Tribune Business, “so that there are no competing investment opportunities that divert funds from this. “Pension funds, credit unions; their whole aim is to deploy cash as quickly as they can, as cash does not earn them any money.” Mr Bowe said they were also seeking to time the PPM for when other investments were maturing or being redeemed, particularly fixed income securities, so investors could switch funds into HoldingCo. The PPM, which will outline the terms and conditions attached to investing in HoldingCo, is being targeted at select institutional investors such as pension funds, credit unions and Bahamian investment/mutual funds. This is to ensure HoldingCo’s equity owners represent the broadest possible Bahamian investor base, especially given that its re-
Receiver dismisses ‘uninsurable’ Baha Mar allegations From pg B1 into this month, on the receivers to come to a decision that could then be advanced to Baha Mar’s secured creditor, the China Export-Import Bank. However, this newspaper understands that while Deloitte & Touche may be “leaning” towards one of the two groups identified as having the most potential, no recommendation has been made yet. Mr Winder yesterday declined to comment on the status of the receivers’ negotiations with the two lead Baha Mar bidders, other than to say: “We’re still working on it.” He was more forthcoming, though, with emphatic rebuttals of the claims made by Dr Rollins, the Fort Charlotte MP, in a statement issued to the media. “I am reliably informed that a recent site inspection of Baha Mar by an insurer, as a pre-condition to insur-
ing the property, revealed some alarming findings,” Dr Rollins alleged. “These findings caused the insurer to conclude that the $3.5 billion asset is presently uninsurable. In effect, due to construction deficiencies, in its present state the property has been assessed to be a $3.5 billion liability. “I am further advised that the repair costs to remediate the construction deficiencies may be as high as $1.8 billion and not the previously estimated figure of $600 million.” Mr Winder told Tribune Business that both claims were “not true”. On the insurance, he said: “I’m in the process of making a payment on my insurance premium as we speak.” As for Dr Rollins’s construction completion cost claim, he said simply: “That’s way off.” Mr Winder, though, declined to supply the true estimate. Tribune Business, though,
RAYMOND WINDER
DR ANDRE ROLLINS
had heard claims similar to Dr Rollins regarding Baha Mar’s insurance. It was suggested that a building inspector, sent out to Nassau by the Lloyd’s of London insurance market, had deemed the resort properties uninsurable because of defects with the sprinkler system and other issues. These claims, though, could not be substantiated. However, informed sources close to developments at Baha Mar said the receivers were starting to lean towards one of the two remaining groups as ‘pre-
ferred bidder’. “One is closer than the other, but they’re keeping all things in play,” one source said of the receivers, speaking on condition of anonymity. However, they expressed doubt as to whether the
mit is to act as a vehicle for future investment in publicprivate partnership (PPP) and infrastructure opportunities - and not just be limited to NewCo. “It’s an opportunity for HoldingCo to take ownership, and is attractive to Bahamians based on the returns they can earn, while providing a vehicle for future PPP activity,” Mr Bowe told Tribune Business. “There is an element of bated breath and excitement, as it’s [HoldingCo] an idea most Bahamians see as the way of the future.” PwC has been one of the main advisors to the Government and its Cellular Liberalisation Task Force on the near-20 month process that led to the June 30 award of the second mobile license to NewCo. Mr Bowe said the process had moved at a “reasonable pace”, even though this may not have been obvious to persons on the outside. NewCo has already held its first Board meeting, featuring four Cable Bahamas-appointed directors, together with three temporary ones nominated by HoldingCo (the Government). Mr Bowe said the two sets of directors had been working “collaboratively” to complete all the documentation necessary for NewCo’s incorporation and
launch, plus the PPM. Apart from the “formalisation of the financial plans and strategy documents”, the two sides have also had to conclude arrangements regarding the management services Cable Bahamas will provide, and associated. “URCA has issued the licence, so you can take that to mean the funds have been transferred for the spectrum fee and the Government has funded HoldingCo for the initial stages,” Mr Bowe confirmed. Cable Bahamas beat out Virgin Mobile (Bahamas) with a $62.5 million bid to acquire the wireless spectrum that NewCo will use to deliver its services to Bahamian and residential consumers. The long-term plan is that HoldingCo will act as a vehicle through which Bahamian institutional, and potentially retail, investor capital can be pooled to invest in public-private partnerships (PPPs) and other key infrastructure projects and assets. The imminent liberalisation of Bahamian mobile communications will end the last - and most lucrative - Bahamas Telecommunications Company (BTC) monopoly.
Government was pushing for a particular bid to be declared the ‘winner’ over the other. “I think the Government wants something to happen, but they’re not telling the receivers to favour one over the other,” the source added. As previously revealed by Tribune Business, Lyford Cay-based billionaire Joe Lewis and his Tavistock Group, the principal developers of the $1.4 billion Albany project, are part of one of the remaining Baha Mar bid groups. Observers, though, believe it is highly likely that the China Export-Import Bank and the Beijing government will favour a Baha Mar buyer with Chinese connections, given that they
can likely work out a deal to make the bank ‘whole’. The selection of a ‘preferred bidder’, though, is merely just the first step towards resolving the Baha Mar impasse. The bidder, and the sale, will both have to be approved by the Supreme Court. And negotiations between the chosen group and receivers, acting for the China Export-Import Bank, are likely to be complex and take several months to conclude. Then there is the small matter of negotiating a Heads of Agreement with the Christie administration, and fulfilling its demands that all Bahamian creditors - especially the contractors with their $74 million liabilities - be ‘made whole’.