The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Waste yesterday said it had created “a win-win” for all stakeholders by selling a majority 51 per cent interest in its fledgling biodiesel business to a local partner for just $180,433.

Francisco de Cardenas, Bahamas Waste’s managing director, told Tribune Business that Bahamas-domiciled 700 Islands Energy Ltd was “just as hungry as we are” to make the loss-making venture work.

“We needed to get somebody in that had the passion, the savvy and the technology to make it [biodiesel] work, and we feel we have the right people,” Mr de Cardenas said.

“We’ve given over management to them, 700 Islands, and are really excited. It is too good an environmental initiative to give up on it, and we have to do what we have to make this thing work.

“They[700 Islands] know what they’re doing. They’re as hungry as we are to make this work. We’re just happy we made this decision. It’s a win-win for everybody.”

The terms of the agreement, which was disclosed in Bahamas Waste’s recently-released 2015 annual report, leave the BISX-listed waste services provider with a minority 49 per cent equity in the waste vegetable oil recycling venture it started when the former Ingraham administration was in office.

It is now a partner with 700 Islands Energy in a new company, Bahamas Sustainable Fuels Ltd, which has been specifically formed to own the biodiesel business.

Mr deCardenas said “two or three staff”, plus the existing building at Bahamas Waste’s Gladstone Road headquarters from which the waste vegetable oil recycling operates, have been transferred to the new company.

Bahamas Sustainable Fuels will lease the building from Bahamas Waste, which provided 10-year ‘vendor financing’ to 700 Islands Energy to help consummate the transaction.

Bahamas Waste’s annual report said: “On January 7, 2016, the company completed the transfer all of its operating equipment and vehicles relative to its waste vegetable oil recycling operations to a new entity, Bahamas Sustainable Fuels Ltd, and entered into an operating lease with Bahamas Sustainable Fuels over the building that previously housed the company’s waste vegetable oil recycling operations.

“Additionally, the company sold 51 per cent of its interest in these assets to 700 Islands Energy, a Bahamian company, for the sum of $180,433.

“The purchase is financed through a 10-year loan facility with interest of 5 per cent per annum and monthly payments of $1,914. Consequently, the company will own a 49% non-controlling interest in Bahamas Sustainable Fuels Ltd.”

Peter Andrews, Bahamas Waste’s chairman, told shareholders via the annual report that the “long-term agreement” with 700 Islands Energy would produce “an improved biodiesel product at lower cost” for the company.

The only present customer for the fuel produced by the waste vegetable oil recycling venture is Bahamas Waste itself, which uses the finished product as an ‘oil price hedge’ and to power several of its vehicle fleet.

Among the principals in 700 Islands Energy, which is based at the Airport Industrial Park, is well-known Bahamian soccer player and coach, Happy Hall.

He has partnered with Michael Lokey, a Florida-based entrepreneur, who is the founding partner and chief executive of Sunshine Biofuels, a five-year old company based on Lake Worth.

Mr Lokey’s Linkedin page lists him as the founder of several other companies involved with renewable and other environmentally-friendly technologies in the US.

Mr de Cardenas, meanwhile, told Tribune Business that Bahamas Waste’s joint venture partner had “big plans” to grow and develop the biodiesel business, but would take these “one step at a time”.

“Hopefully, in the next three to six months, there will be a clear picture of where we’re heading,” he added.

Bahamas Waste appears to have relinquished majority ownership, and management control, in the belief that a partner with its sole focus on the waste vegetable oil recycling/biodiesel venture will be able to maximise its full potential.

The BISX-listed company as numerous business streams to focus on besides biodiesel, including its core residential/commercial garbage collection; medical waste disposal facility; provision of portable restrooms; and cardboard recycling.

And, as a publicly-owned company, Bahamas Waste has a responsibility to maximise profits and returns (dividends) for its shareholders.

Despite a 25.3 per cent increase in its full-year 2015 net profit to $955,417, consistent annual losses incurred on the biodiesel and cardboard recycling ventures have dampened Bahamas Waste’s shareholder returns.

The financial statements show that the biodiesel operation has been nothing if not consistent, with the 2015 loss of $159,687 matching the prior year’s $158,572. Revenues show the same rend, having increased little year-over-year, from $347,420 to $356,163.

As a result, the biodiesel operation is likely to fit better with a privately-owned Bahamian company able to take losses in the initial stages, rather than a publicly-owned company whose responsibilities elsewhere.

Mr de Cardenas indicated as much, but told Tribune Business that the venture was too important for the country to lose, given that it represents one of the first tangible efforts to benefit the environment and economy via waste recycling.

“We took all considerations in hand,” he said of Bahamas Waste’s decision to relinquish control. “It just worked out right.

“They [700 Islands] have the expertise running it, and we’re not incurring any losses. It’s a win-win for everybody.”

Turning to the biodiesel venture’s potential, Mr de Cardenas told Tribune Business: “With everything that is going on with air quality, emissions, I think this is huge. I think we’re leading by example.

“Yes, it hasn’t been easy, but I think people will look to us and say these guys are really trying their hardest to make a difference.

“It’s not as technically easy as one would think. We feel we’ve found the right partner; they’re good people. It’s just going in the right direction now, we think.”

Mr de Cardenas praised 700 Islands Energy’s courage in taking on the biodiesel venture at a time when its attractiveness was reduced because of the current low oil prices.

He added, though, that these prices were likely to increase again within the next one to two years, favouring the recycling option once again.