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Gb Power Buy-Out: ‘This Is Beginning, Not End, Of Fight’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

OPPONENTS of the GB Power buy-out yesterday warned the utility’s owner: “Don’t count your Depository Receipt chickens before they’re hatched” despite investor approval for the deal.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business that this was “the beginning of the fight, not the end”, and pledged to file his Judicial Review challenging the $35 million deal with the Supreme Court next week. A similar message was delivered by Pastor Eddie Victor, head of the Coalition of Concerned Citizens (CCC), who promised to step up a lobbying campaign urging the Government not to approve the buy-out by Canadian utility, Emera.

The duo spoke out after 89 per cent of Bahamian shareholders in ICD Utilities, the BISX-listed vehicle that holds a 50 per cent equity stake in GB Power, were said to have voted in favour of accepting Emera’s offer.

While the outcome of Wednesday night’s annual and extraordinary shareholders’ meeting gives the impression that the buy-out is a ‘done deal’, both Mr Smith and Mr Victor argued that Government approvals and the courts still remain as hurdles.

“I want to let Emera know this is the beginning of the fight, not the end, and they shouldn’t count their Depository Receipt chickens before they’re hatched,” Mr Smith told Tribune Business.

“The next step is to continue to agitate publicly to urge the Government to protect those Bahamian shareholders who did not vote to accept Emera’s proposal, and who wish to continue to own shares - directly or indirectly - in GB Power Company, not Emera International.

“The Bahamas Investment Authority (BIA) approval, which they waved around as some kind of legitimate permit from the Government, as we all know has no basis in law and it was a regulatory snow job because the BIA doesn’t exist in law.”

A challenge to the validity of the BIA approval is likely to prove central to Mr Smith’s promised Judicial Review, and the QC also pointed out that the Central Bank only gave an ‘approval in principle’ on the exchange control aspect.

Disclosing that he “fully expected” most of the 19.6 per cent Bahamian minority shareholders to vote in favour of the buy-out, Mr Smith said final approvals from the National Economic Council (NEC) and Central Bank remained outstanding.

“We’re still looking at challenging the conditional approvals that were issued via Judicial Review, and probably will file it next week,” he added. “I hope that the Government will then respect that there is a process before the courts and no final approvals will be given before the matter is determined, and that they respect the rule of law.”

Pastor Victor was in a similar mood, telling Tribune Business: “The fight doesn’t stop; it intensifies. We’re going to fight and press the Government and its agencies in the next few days. The thing now is what is the Government going to say and do. We’re going to be at it.”

Bahamian shareholders also expressed disquiet over the structure of Wednesday night’s meeting and its timing, given that it was held at 5pm at Freeport’s Pelican Bay resort.

The lack of parking at the resort meant a number of minority investors, and their proxies, were delayed in arriving, and the vote on whether to accept the Emera offer was taken right at the start of the meeting - around 5.15pm-5.20pm. This resulted in some shareholders barely arriving in time to vote, while others missed it.

Carey Leonard, the Callenders & Co attorney and partner of Mr Smith, said he was one of those forced to park around one-quarter of a mile away near the police station and only just arrived in time for the vote.

“When I got in, the chairman [Scott Balfour, also Emera’s chief executive] said: ‘Welcome, we’re voting’,” Mr Leonard recalled. “I replied: ‘I haven’t had a chance to speak’. He repeated that they were voting, and I said I should have had a chance to speak.

“I said that I wanted it in the meeting minutes that this was wrong, and he said: ‘Would you like to speak?’ So I said my five cents.”

Pastor Victor, too, said other minority shareholders and persons at the meeting on the Coalition’s behalf expressed similar complaints to Mr Leonard, suggesting the time, parking issues and agenda had been structured to ensure the buy-out was approved.

“They made absolutely sure they got this thing off,” Mr Leonard told Tribune Business. “By 5.15 pm they were already voting. They really pushed it through very quickly, and must have known people were having trouble parking. There were four or five of us at the entrance.”

Comments

DonAnthony 1 week, 5 days ago

Emera has forced this through at every quarter with no regard for Bahamian minority shareholders. It has been a process that has not been independent, transparent or fair. It claims it was approved by “ independent” directors, one of whom is Michael Moss the former chairman of BEC and current director of ICD. How can he possibly be independent if he is paid an annual fee from Emera as a director?

It is said KPMG has reviewed the offer and deemed it fair. How can KPMG be independent and fair if it has been paid by Emera to conduct this review?

I contacted CFAL about this offer and they pitched to me how Fair it was and actively encouraged me to accept the DRs, they failed to mention of course that it was subject to a 25% tax. CFAL happens to be the manager and contact for this proposed offer. How are they independent and how can their advice be trusted when they too have been compensated by Emera as manager?

This has been forced through at every point. Emera has spent so much money and forced this through because they know these shares are worth so much more than $8.85. If they paid $8.20 for 50 % of ICD in 2008 when the GBPC had old inefficient engines and a dilapidated infrastructure how in hell in 2017 after a new modern efficient plant and completely new transmission infrastructure can the shares only be worth $8.85. It defies logic, but this is what happens when a dishonest company has systematically suppressed the share price by refusing to pay fair dividends. Who will stand for Bahamians?

Will this government truly protect minority investors? How do you empower Bahamians if foreign corporations are allowed to act in this way? I call on the govt to demand a truly independent review of this transaction and either block this deal entirely or force Emera to increase its buyout offer to truly compensate Bahamian investors for what these shares are worth.

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DaGoobs 6 days, 19 hours ago

The way that this transaction was handled by Emera and the various regulatory agencies shows the deficiencies in our supervisory systems and the lack of concern for Bahamian investors. Rather than approving this transaction, the Investment Authority and the Central Bank should have required Emera to sell more of their shares to Bahamians rather than have 100% of Grand Bahama Power owned by a Canadian entity. Emera touts the fact that the authorities in Barbados allowed them to acquire 100% ownership of their affiliate there and so there was nothing wrong with them pulling off a similar stunt in The Bahamas. The Barbadians made a bad mistake and our regulatory authorities are making a similarly bad mistake by approving this transaction. We did not approve 100% foreign ownership of BTC or Cable Bahamas or Aliv or BEC/BPL so why should we approve 100% foreign ownership of the electricity provider in Grand Bahama. Further, Emera/GB Power is engaged in a lawsuit against URCA challenging the Bahamas Government's power to pass legislation appointing URCA as the regulatory authority for electricity throughout the Bahamas, including Freeport and the rest of Grand Bahama. The BIA and Central Bank approved the transaction without considering the legal implications of this lawsuit. Finally, neither the BIA or the Central Bank sought any comments or representations from the public on this transaction before arriving at their decisions. Almost as if the Bahamian people don't count in a matter that directly impacts them. The high-handed, take-it-or-leave-it approach by Emera does speak well of their views or consideration of their Bahamian shareholders. It was okay to take their money when ICD needed to sell the shares some years ago but now that they no longer need these shareholders, they must take the $8.85 per share price being "offered" whether they like it or not.

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