The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Government was yesterday said to be on a “fact-finding mission” to determine whether approving the GB Power buy-out will be “consistent” with prior policy decisions.

Carl Bethel QC, the Attorney General, revealed that the Minnis administration is meeting with GB Power and its attorneys this morning to “go through certain things” and obtain information to assist its decision.

He explained that the Government wanted to ensure its final verdict on the buy-out of minority Bahamian shareholders was aligned with the decisions reached by previous administrations when they approved Emera’s acquisition of the electricity monopoly.

“The Government wants to be sure that whatever is done is consistent with previous policy decisions of other governments in the past and, if there is a change, that such change is justified in the circumstances,” Mr Bethel told Tribune Business.

“If there is a derogation from the previous policy, there has to be a rationale for it..... We’re doing what we have to do to ensure that any decision of the Government on this matter is grounded in the facts, in terms of what were the initial investments by the Canadian company [Emera] in Freeport, and what were the policy considerations.”

Emera acquired its majority 80.37 per cent stake in two tranches, first acquiring Lady Henrietta St George’s 50 per cent interest in BISX-listed ICD Utilities in 2008. Given that ICD Utilities holds a 50 per cent equity stake in GB Power, that deal enabled Emera to ‘get its foot in the door’ with a minority 25 per cent interest. It subsequently became GB Power’s majority owner when it bought out Marubeni, with both purchases - that and Lady Henrietta’s - occurring under the last Ingraham administration.

Mr Bethel yesterday acknowledged that there were “two different transactions” for which Emera had received past approvals, with the Canadian utility subsequently “deciding to capitalise the company and obtain equity to defray the costs of acquisition”.

“This would have all required government approvals at every step of the way,” the Attorney General confirmed. “We want to determine the nature of the approvals given in the past to see whether we ought to approve, and whether such approval would be inconsistent with the approvals given at the different stages of initial investment. We’re determining what those are, and what the facts are.”

Mr Bethel’s comments will likely dash the hopes of Emera/GB Power, and some of the latter’s Bahamian shareholders, that the government approvals required to complete the buy-out will be forthcoming imminently.

Emera informed ICD Utilities’ Bahamian shareholders on Monday that the “original timeline” for completing the $35 million buy-out 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..... We are committed to completing the transaction as soon as possible following finalisation of arrangements by the applicable regulatory bodies.”

Mr Bethel yesterday that every foreign investment in the Bahamas “has a certain policy element to it”, given the need for exchange control and National Economic Council (NEC) approval, and the existence of the National Investment Policy.

He added that, when it came to exchange control approval, the Central Bank required details on the level of foreign ownership in any ‘domestic’ entity. “Any change in the foreign investment; if the foreign investor wants to change the shareholding structure, it has to go to the Central Bank for approval,” Mr Bethel added.

“We are still seeking certain background information,” the Attorney General said of the GB Power buy-out. “We have a meeting with the company and its attorneys some time tomorrow morning [today].

“We’re going to go through certain things, and there may be some information we require assistance from them on. Once we have the facts, we’ll be able to advise the Government. Right now, we are engaged in determining the facts, and that will assist the Government in arriving at a rationale and defensible determination of the issue.”

K P Turnquest, the Deputy Prime Minister, told Tribune Business on Monday that the Government was “concerned” that the GB Power buy-out - if approved - is contrary to its ambition of creating wealth and investment opportunities for Bahamians.

“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.”

Mr Bethel declined to be drawn on this issue yesterday, saying the final decision on whether to approve Emera’s buy-out of the Bahamian minority investors would be for the Cabinet to take collectively - not an individual minister.

If the buy-out proceeds, ICD Utilities will ultimately be de-listed from the Bahamas International Securities Exchange (BISX). It will, though, be replaced by Emera Bahamian Depository Receipts (BDRs) for those local shareholders who have elected to swap their ICD Utilities shares for an interest in the Canadian utility.

Emera and GB Power are likely to argue that this maintains indirect Bahamian ownership in GB Power, while giving local investors access to a much wider, diversified portfolio of assets representing the former’s various utility interests throughout Canada, the US and the Caribbean.

The two companies have also repeatedly touted that the Bahamas Investment Authority (BIA), which is effectively the Cabinet’s investment secretariat, approved the buy-out several months before it was formally announced. And the Central Bank, too, had given its ‘approval in principle’.

These approvals are being challenged by Fred Smith QC and his company, SeSaChe, via a Judicial Review action in the Supreme Court.

They are alleging that the BIA and Central Bank approvals are “ultra vires, irrational and procedurally unfair”.

SeSaChe, which holds $300,000 worth of shares in ICD Utilities, 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.