By NEIL HARTNELL
Tribune Business Editor
A PROMINENT businessman has again urged the Securities Commission to "become involved" and ensure the prospectus for the $10 million Arawak Cay initial public offering (IPO) is amended to confirm that the 20 per cent public shareholders will be able to vote on independent directors.
Franklyn Wilson, the Sunshine Group and Arawak Homes chairman, responding to Arawak Port Development's (APD) chief executive, Michael Maura, who last week said the Prime Minister's Office had insisted that the issue of minority investor representation had to be addressed at APD's next annual general meeting (AGM), said more was required than oral assurances.
"This is just confusion," Mr Wilson told Tribune Business. "What I understand them to be saying, and notwithstanding the absence of confirmation in the prospectus, is that at the next AGM the public will be given the opportunity to vote for independent directors.
"Something as significant as this has to be in the prospectus. This, it seems to me, is clearly a matter for the Securities Commission to get involved with. You don't do a prospectus like this."
Praising the Prime Minister's Office for seeking to protect the interests of Bahamian retail and institutional investors, who are being solicited to buy one million shares worth $10 apiece, Mr Wilson said APD and its advisers seemed to be conceding that a mistake, which needed fixing in writing in the prospectus, had been made.
"In summary, to me it appears the Office of the Prime Minister recognises that either there's been an oversight, a mistake or something's gone wrong, and it seems that the Office of the Prime Minister is saying to these fellas: 'Fix it'," Mr Wilson told Tribune Business.
"In the process of fixing it, they have to do it properly. They're saying they'll fix it at the AGM. No: The time to fix it is now, by coming out with a prospectus that is accurate, and the Securities Commission has the responsibility to see that happens."
Addressing concerns last week over whether APD's Board would contain independent, non-executive directors charged with safeguarding the 20 per cent equity interest held by the Bahamian public, Mr Maura told Tribune Business that the Government raised this issue when approving the $10 million IPO's offering prospectus.
"The Office of the Prime Minister expects, at the next APD AGM, that the issue of minority representation will be incorporated in the election of Board members," Mr Maura confirmed.
"That has been communicated to me by the Office of the Prime Minister, and been communicated to the APD Board and the Arawak Cay Port Development Holdings shareholders." The latter is the company owned by Nassau Container Port's 20 founding shareholders, and which will own 40 per cent of APD's equity post-IPO.
The stipulations by the Prime Minister's Office run contrary to provisions in the original Memorandum of Understanding (MoU) between the Government and the private sector (ACPDH), which set out the framework for the Arawak Cay port.
The MoU specified that the APD Board would have a maximum seven directors, four of whom - including the chairman - were to be appointed by the private sector, and three, including the deputy chairman, appointed by the Government. These rights were to remain in place after the IPO.
The IPO prospectus differs slightly, providing for a maximum nine directors on APD's Board, with five from the private sector and four from the Government, but again there is no mention of, or provision for, independent directors to represent the 20 per cent investor minority.
Mr Maura, though, told Tribune Business it had always been the intention of the Government and ACPDH to provide for the election of independent representation to the APD Board.
"It was an understanding that it will happen, but the mechanism had not quite been defined," the APD chief executive explained. "But, at the time we as a company had to get approval for the IPO, the Office of the Prime Minister said that minority representation has to be considered at the next AGM. It will happen, notwithstanding what's identified in the MoU."
With APD's financial year ending on June 30, 2012, the next AGM will likely be called some time within the next 12 months. Given that the Government and ACPDH both will retain a 40 per cent equity interest, any independent directors voted on from the AGM floor will have to meet with their respective approvals.
Mr Wilson, meanwhile, also took issue with APD's assertion that any independent directors appointed to the Board had to "bring some value".
"They're bringing $10 million. How much more value do they have to bring than that?" Mr Wilson asked. "Whoever they elect to represent those 20 per cent will be someone they have confidence in. Let's no start to prejudge the standing and quality of those persons who may be elected."
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