The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has been warned it will lose investors if it stalls for too long on the $70 million sell-off of its Aliv majority shareholding.

Gowon Bowe, one of the proposed private placement's advisers, told Tribune Business it was vital to maintain "the excitement and expectation" among institutional investors about holding an equity interest in the Bahamas' second mobile operator.

The sell-off of the Government's 51.75 per cent interest, held via the HoldingCo vehicle, has been anticipated for months, and Mr Bowe warned that the likes of pension funds, mutual funds and credit unions cannot be expected to keep multi-million dollar funds waiting indefinitely.

Acknowledging that the general election, and its result, had impacted the Government's Aliv exit, Mr Bowe told Tribune Business: "We need to move so that we don't lose the excitement and expectation that was there.

"If we delay and don't close the deal, people will be deploying resources elsewhere to get a return. The parties we've approached, their ability to hold funds is not indefinite, and that is certainly being communicated to the policymakers. Money sitting on deposit is certainly not making money these days."

Mr Bowe, now Fidelity Bank (Bahamas) chief financial officer, emphasised that the private placement just awaited a decision from the Minnis administration to 'pull the trigger' after familiarising itself with the transaction's implications.

"Unfortunately, we had an election taking place in the middle of a transaction," he told this newspaper. "What I can say is the new Board [of HoldingCo] has certainly been persistent to get a meeting with the powers that be to move forward as quickly as possible. It now boils down to them [the Government] and what they want to do."

Mr Bowe reiterated that, should the $70 million be fully placed, the Government would realise a much-needed revenue windfall that could help cover deficit financing needs pegged at a tota; $722 million for the 2017-2018 and immediate past fiscal year.

"The proceeds coming from that will enure to the Government's coffers," he emphasised. "It will not solve all the problems, but will certainly be a welcome infusion."

The Aliv private placement represents potential 'low-hanging fruit' for the Minnis administration in terms of securing significant one-off revenues for the Public Treasury, given that much of the work was done by Mr Bowe and others under the former Christie administration.

The Minnis administration could realise a much-needed revenue windfall, given its precarious fiscal position, should HoldingCo's full $70 million private placement be taken up by Bahamian institutional investors.

Realising the full $70 million would aid its bid to keep the 2017-2018 fiscal deficit below the $323 million outlined in the Budget, but the Government cannot wait around forever to achieve this target.

Mr Bowe said the change in government, which resulted in a new HoldingCo Board of Directors and minister responsible, had naturally held up the Aliv placement given that they needed to familiarise themselves with the transaction.

"While we'd liked it to have moved faster, we're now in a position of waiting on the new government to give the go-ahead," he told Tribune Business. "Cabinet position papers were already there, and the Prime Minister indicated he had no intention of changing the former Cabinet's position; they just wanted to satisfy themselves of the position."

The HoldingCo investment was effectively a 'bridge financing' arrangement by the Government to ensure that Aliv's network roll-out was not delayed by the wait for private investors to come in.

Its exit was always planned, apart from any minority interest the Government may want to retain as an income asset.

The $70 million potentially generated by selling-off HoldingCo would also enable the Government to, finally, realise the proceeds from the $62.5 million spectrum license paid by Cable Bahamas. Those funds were immediately injected back into Aliv as HoldingCo's share of its infrastructure build-out costs.

HoldingCo holds the majority 51.75 per cent equity stake in Aliv, with Cable Bahamas owning the remaining 48.25 per cent. The BISX-listed communications provider has Board and management control.

HoldingCo was initially conceived as a vehicle that would pool Bahamian capital for investment in a variety of infrastructure-based developments throughout the country, with Aliv designed to be just its first holding.

The institutions eyed as its first investors have been targeted because they represent the broadest possible spectrum of Bahamian ownership through their members.