Richard Coulson on the BTC Deal

I have just received the document issued by Franklyn Wilson, Chairman of the BTC Negotiating Committee, giving questions and answers about the new “Majority Bahamian Owned”  BTC.

I have no quarrel with the substantive results of the new arrangement.  Clearly the Committee did a heroic  job of following  the Prime Minister’s mandate to negotiate   a majority  interest in BTC rather than simply holding 49%. The final result has been accepted by Cable & Wireless (CWC), the other negotiating party across the table. When both parties agree, a done deal must be regarded as a good deal.

However, in his enthusiasm to defend the new BTC, Mr. Wilson provides answers that overstate the case and may mislead Bahamians. Throughout, he emphasizes that  “the people of The Bahamas” now have  a 51% “majority economic interest” in BTC, resulting from the 49%  held directly by Government and from the 2% transferred by CWC to the newly created BTC Foundation, whose Council members will be chosen by Government. He nowhere reveals that, as stated in CWC’s press release, this 2% consists of non-voting shares, entitled to receive dividends but not giving any voting rights at shareholders’  meetings. The release also makes clear that CWC will continue to own slightly more than 49% of the voting shares, with Government owning exactly 49%. Thus, the combined holding  of  Government  and  the Foundation  cannot be considered, in the accepted corporate sense of majority voting rights, a true controlling position, although it does provide a majority of dividend revenues.

Mr. Wilson’s answers also suggest that Government will now have a larger management role in  BTC. As evidence, paltry at best, he cites the newly created position of a Bahamian advisor to the Chairman  and the two  meeting per year that BTC must hold with the Prime Minister. By contrast, the CWC release states that, as the largest voting shareholder,  it will  retain management and Board control of the business, allowing it to report  BTC financial results on a consolidated basis.

Finally, Mr. Wilson rejects any claim that Government has not made full disclosure about the value of the 2%. A couple of securities analysts, he tells us, have given estimates between $25 million and $50 million. But these estimates are meaningless unless and until audited financial statements of BTC are released for public scrutiny. I recently spoke to an officer of CWC at their London headquarters and urged that they release the figures as soon as available,  I was told this is under consideration.

These financial statements will be essential for any BTC share offering to the Bahamian public. In my view, the Council of the Foundation should promptly start planning such an offering of their 2% holding. The  Foundation is mandated to use its resources in support of several worthy objectives, such as improving the service of Bahamas Broadcasting Corporation. Its resource will be extremely limited If it simply relies on annual dividends from its BTC shares, reputed to be in the low seven figures ($1,500,000?). Alternatively, a share offering at a sensible price would be eagerly snapped up by our capital-markets community that holds plenty of liquidity waiting for attractive investments, and would give the Foundation an immediate  sum, possibly up to $50 million,  that  could be responsibly applied to selected objectives. The offering would also give a needed stimulus to trading on BISX, suffering from a long drought of new issues.

Mr. Coulson has had a long career in law, investment banking and private banking in New York, London, and Nassau, and now serves as director of several financial concerns and as a corporate financial consultant.