The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government last night admitted it was "concerned" that the GB Power Company buy-out is contrary to its ambition of creating wealth and investment opportunities for Bahamians.

Its position was revealed as Canadian utility giant, Emera, informed Bahamian minority shareholders in BISX-listed ICD Utilities that the buy-out's completion had been delayed by the wait for final government and regulatory approvals.

K P Turnquest, the deputy prime minister, told Tribune Business that the Minnis administration was still awaiting "advice" from the Attorney General's Office over a transaction that would lead to GB Power becoming 100 per cent owned by Emera.

"I believe we're still waiting on advice on that from the Attorney General. He'd be the best person to ask," Mr Turnquest said. Calls by this newspaper to Carl Bethel QC were not returned before press time last night.

The Deputy Prime Minister, though, did reveal the Government's concerns that the buy-out, which would ultimately result in ICD Utilities being de-listed from BISX, ran counter to its 2017 election campaign manifesto and economic policies.

"It's fair to say we're concerned about releasing the ownership to a foreign entity because it's our stated intent to create opportunities for investments by Bahamians," Mr Turnquest told Tribune Business.

"To the extent these opportunities arise, we'd prefer to have Bahamians at least involved in the ownership on a widespread basis. Our wish is to see Bahamians involved in the ownership of a diverse portfolio of investments."

Emera and GB Power Company, Grand Bahama's electrical monopoly, are likely to argue that minority ICD Utilities shareholders were given the option of retaining ownership in the latter indirectly by investing in the Canadian utility's Bahamian Depository Receipts (BDRs).

These derivative securities, which would be listed and traded on BISX if the buy-out goes through, would retain indirect Bahamian ownership in GB Power and a much wider, diversified portfolio of assets representing Emera's various utility interests throughout Canada, the US and the Caribbean.

However, Mr Turnquest's comments will likely spark further uncertainty as to whether the buy-out of the collective 19.63 per cent Bahamian interest in GB Power will proceed. Some may also argue that it could undermine confidence in the Bahamian capital markets and the security of investments in this nation, given that buy-outs of minority shareholders are standard transactions at a global level.

Still, the GB Power buy-out appears contrary to the Free National Movement's (FNM) energy sector policy, and is the opposite of its election manifesto's intention to privatise Bahamas Power & Light (BPL) in a way that "ensures Bahamian ownership through a majority shareholding".

Emera, in a notice to shareholders yesterday, said the "original timeline" for completing the transaction had been altered by the wait for final government approvals.

"Emera Utilities Holdings advises shareholders of a delay in the completion of its acquisition of all outstanding shares of ICD Utilities that it does not own," the Canadian utility said.

"We are working closely with the appropriate regulatory bodies, and will advise shareholders when the transaction is completed."

The statement added: "We appreciate that this represents a delay from our original timeline for transaction completion and payment to minority shareholders.

"We thank shareholders for their patience. We are committed to completing the transaction as soon as possible following finalisation of arrangements by the applicable regulatory bodies."

Those "regulatory bodies" are chiefly the Government's National Economic Council (NEC), which is really the Cabinet or a Cabinet sub-committee, and the Central Bank of the Bahamas given the need for exchange control approval.

Emera and GB Power have repeatedly touted that the Bahamas Investment Authority (BIA), which is effectively the NEC's Secretariat, approved the buy-out several months before it was formally announced. And the Central Bank, too, had given its 'approval in principle'.

Bahamian shareholders who elected to take the all-cash payout from Emera, the $8.85 per share price representing a 26.25 per cent premium to that when the deal was announced, are likely to be especially peeved at any approvals delay given that many will have been relying on it to finance Christmas spending.

However, one shareholder delighted by yesterday's developments was Fred Smith QC, the Callenders & Co attorney and partner, who has filed a Supreme Court action to block the GB Power buy-out by overturning the Government's regulatory approvals.

Mr Smith told Tribune Business that the delayed completion would prevent Emera from consummating the buy-out and, potentially, making his Judicial Review action 'null and void'.

"This maintains the status quo between the Bahamian shareholders, and Emera and GB Power, so that people's rights are not overtaken by events," he said of the approvals delay.

"It certainly shows a high degree of respect that the matter is before the courts before the Government makes any decision."

Confirming that that his application for permission to bring Judicial Review proceedings remains before the Court of Appeal, Mr Smith added: "I continue to urge GB Power and Emera to provide an additional option to ICD Utilities shareholders, and that is to issue additional shares in GB Power directly for the equivalent shares in ICD Utilities.

"If this were to happen, those who wish to take advantage of the various options may be able to do so."

Archibald Collins, GB Power's president and chief executive, previously told Tribune Business that while Mr Smith's recommendation was an option, it was never discussed when the buy-out structure was determined.

He explained that it did not meet Emera's goal of "simplifying" GB Power's corporate ownership structure, and consolidating it under one entity: Emera.

Mr Smith and his company, SeSaChe, are seeking to quash the approvals that gave Emera the go-ahead to buy-out GB Power's minority Bahamian shareholders via their Judicial Review.

They are alleging that the Bahamas Investment Authority (BIA) and Central Bank approvals are "ultra vires, irrational and procedurally unfair".

The company, which holds $300,000 worth of shares in ICD Utilities, the holding vehicle for 50 per cent of GB Power's equity, is also seeking court Orders to block the Government from approving the buy-out without first consulting Bahamian shareholders and other "stakeholders", such as the Grand Bahama Port Authority (GBPA).

It is arguing that since the BIA is not created by law it has "no authority over the personal shares owned by Bahamian citizens", and thus has "no power" to approve Emera's purchase of SeSaChe's shares.