The Tribune

By NEIL HARTNELL

Tribune Business Editor

and DENISE MAYCOCK

Tribune Reporter

A “strong, strong majority” of Bahamian shareholders last night voted to accept the $35 million GB Power buy-out, despite last-ditch arguments that the offer was hugely undervalued.

Archibald Collins, the utility’s chief executive, told Tribune Business that it would be “moving forward” with the deal after most of BISX-listed ICD Utilities minority investors accepted Emera’s $8.85 per share offer. Describing last night’s meeting as attracting “the most shareholders we ever had” for an annual general meeting (AGM), Mr Collins emphasised that Emera and GB Power “having nothing to hide” in terms of their rationale and motivation for the offer.

“Some concerns were expressed with the proposed transaction; the buyout of the minority shareholders,” he said. “But, again, the shareholders voted overwhelmingly - a strong, strong majority - to accept Emera’s offer of $8.85, and obviously we see that as a very fair offer. So we are pleased that shareholders have seen it that way.

“We will be moving forward with the buyout. The shareholders have until November 27 to elect whether or not they prefer $8.85 in cash [per share] or take Depository Receipts, which is the equivalent value of EMERA shares effectively.”

Mr Collins acknowledged the concerns, and opposition, in some quarters to a buy-out that will see Emera take 100 per cent ownership of GB Power.

But he added: “We don’t have anything to hide. I think $8.85 represents fair market value. Clearly, KPMG, who were retained by the independent Board members agreed with that valuation.

“I think all I can say is that we understand where some of that sentiment would come from. But the vote tonight, I think, speaks for itself that people are very supportive of $8.85.”

The buy-out’s opponents, though, suggested that the real reason for Emera’s offer was yesterday exposed by Tribune Business through its revelation of a planned $4.5 billion oil refinery and storage terminal for Grand Bahama.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business: “Now we see how valuable these shares of GB Power and ICD Utilities are and will be. 

“Don’t tell me that a prospective $4.5 billion investor hasn’t already been having very intense talks with GB Power. Emera mussee tink we is fool, hey? Nothing ever happens in a vacuum.

“If the GB Power shares were not valuable, why would Emera be trying to buy them from Bahamians in the first place?” Mr Smith continued. “The happy opportunity of this $4.5 billion oil refinery in Grand Bahama shows how lucrative the value of GB Power shares will explode to very soon.

“I am shocked that the directors of ICD Utilities, at the recent shareholder meetings last month, failed to disclose this atomic business opportunity in GB Power’s future.”

A project of the scale and nature of Oban Energies’ proposal will significantly boost GB Power’s electricity sales and revenues, along with its bottom line profits. That, in turn, would increase the share price of ICD Utilities and the value of Bahamians’ investment under the current structure, again raising suspicions that the offer to minority investors is under-valued.

However, a GB Power spokesperson, describing Mr Smith’s comments as a “conspiracy theory”, said the utility had been unaware of the Oban Energies project until executives read about it in Tribune Business yesterday morning.

The spokesperson denied GB Power and its executives had met, or held discussions, with Oban Energies, and added: “We had no knowledge of this deal. We found out about it in The Tribune this morning like everyone else.”

Mr Smith, though, pointed out that a $4.5 billion investment was equivalent to more than 50 per cent of the Bahamas’ national debt, and said it was “incumbent” on GB Power, Emera and ICD Utilities to have disclosed any knowledge of it to the Bahamian shareholders.

“The question is: Did the independent directors know of this as well, and did KPMG know about this because this obviously has a dramatic effect on the future value of GB Power and the shares of ICD Utilities,” Mr Smith told Tribune Business.

“In addition, the Central Bank’s exchange control must have known about this, and the BIA and the Government, so I urge them to refuse to let Emera engage in this. It’s a gross under-valuation.”

Mr Smith again reiterated his call for ICD Utilities shareholders to be offered one GB Power share for every two in Emera, arguing that this would retain local ownership while achieving the latter’s goal of simplifying the corporate structure by taking out the BISX-listed holding vehicle.

This, though, is likely to be forlorn unless there is regulatory intervention or Mr Smith succeeds with his own Judicial Review.

With the buy-out approved, Bahamian shareholders now have three ‘exit route’ options. They can accept the $8.85 per share for their holdings, representing a 26.25 per cent premium to the $7.01 BISX price the day before it was announced, and 33 per cent premium to the “24-month volume-weighted average price ICD Utilities.

Alternatively, Bahamian shareholders can trade their ICD Utilities shares for 0.913 Emera depository receipts, enabling them to switch their narrowly-focused investment in GB Power for an international stock with worldwide utility investments. Four depository receipts will equal one Emera share.

The third and final choice is for the Bahamian investors, who hold a combined 39.26 per cent of ICD Utilities (translating into 19.63 per cent of GB Power), to take a combination of cash and depository receipts (DRs). Those who fail to specify their choice by November 27, 2017, will also be deemed to have chosen this option.