The Tribune

By NEIL HARTNELL

Business Editor

nhartnell@tribunemedia.net

INVESTMENT bankers yesterday hailed the Government's approval of the Grand Bahama Power Company buy-out as "common sense prevailing" to the wider capital markets' benefit.

Anthony Ferguson, CFAL's principal, told Tribune Business it was vital for this nation to have "a quick and transparent" approvals process so that the Bahamas International Securities Exchange (BISX) could attract more international listings.

He warned that unanticipated delays such as those that occurred over the GB Power buy-out, with the Government creating uncertainty by seemingly going back on earlier approvals, could deter investors from doing business in the Bahamian capital markets.

"If we're going to attract more international listings on the local exchange, we certainly need to have a transparent process and a quick process for making decisions, so that there are no unnecessary delays in companies or mutual funds being able to make decisions in a competitive market," Mr Ferguson told Tribune Business.

"I think overall it's [the Government's final approval] positive and encouraging for companies looking to list mutual funds and Bahamian Depository Receipts (BDRs) on the exchange in the future. You could possibly see a number of local financial institutions listing BDRs on the exchange."

Mr Ferguson mentioned the likes of Royal Bank of Canada (RBC) and Scotiabank as candidates for a BDR listing on BISX, pointing out that this was likely preferable to a dual listing due to the lower regulatory and filing costs involved.

The CFAL chief was speaking after the Minnis administration confirmed late on Tuesday night that the Cabinet had given final approval for Emera, the Canadian utility giant, to complete its buy-out of the Bahamian minority investors in BISX-listed ICD Utilities.

The latter entity acts as the 'holding vehicle' for a 50 per cent equity stake in GB Power, and the Government - while acknowledging that the transaction was contrary to its objective of creating

"a shareholder society" - said there was "no legal justification" for it to intervene in a private transaction already approved by 96 per cent of the Bahamian shareholders.

CFAL acted as Emera/ICD Utilities' local financial adviser on the deal, and Mr Ferguson said: "I think it was the right decision.

"From what I know shareholders were anxious, so they have to be happy about the fact it was approved. I'm not sure when the money is going to be released, but I know people will welcome the opportunity to receive their funds."

Many ICD Utilities will have based their Christmas shopping plans, and made other commitments, on the basis of receiving the $8.85 per share cash pay-out - representing a 26 per cent premium to the pre-transaction announcement price - only to have this dashed by the delayed wait for final government approval.

Michael Anderson, RoyalFidelity Merchant Bank & Trust's president, branded the Government approval as "common sense prevailing" given the substantial Bahamian minority investor approval and the absence of any law that could block the transaction.

"I think our views are consistent with where the Government ended up," he told Tribune Business. "I was pleased to see some sense at the end of the day. Common sense prevailed.

"Ninety-six per cent of minority shareholders wanted to do it, there was no law to block it, and whatever the rationale was [for the Government's review] didn't make sense. Right at the wire they stepped back."

Had the Government blocked the transaction, it would likely have led to potential legal action by Emera and ICD Utilities. As it is, they only currently have to contend with the potential Judicial Review proceedings launched by Fred Smith QC on behalf of his company, SeSaChe.

Carl Bethel QC, the Attorney General, previously told this newspaper that the Minnis administration wanted to be sure that approving the Emera purchase was "consistent" with previous policy decisions taken when the Canadian utility first bought into GB Power.

Mr Anderson said there were numerous other investment and ownership opportunities available to Bahamians, pointing out that Emera had also offered ICD Utilities shareholders the chance to invest internationally in its Canadian, US and Caribbean operations via the creation of BDRs.

The Emera Depository Receipts (DR) will effectively allow Bahamian investors to maintain indirect ownership in GB Power, as they will be a direct replacement for the ICD Utilities shares. The DR option, Emera and its advisers are arguing, also means that Bahamian investors are not being forced to sell.