by Richard Coulson
Government is holding a sound investment worth at least $70 million - its 51.75 percent equity stake in ALIV, acquired in early 2016 as part of ALIV’s initial capital funding. The only question is when and how to realise cash on a sale of this stake.
The PLP’S original plan placed the ALIV shares in a special purpose government vehicle named “Holding Co” and I heard Perry Christie emphasise to its chairman Jimmy Campbell and its financial advisor Gowon Bowe that this was to be a “temporary” commitment intended for prompt sale. Nothing had been done by the time of the 1917 election, but Mr Bowe continued to promote a scheme whereby Holding Co itself would be sold to investors in a so-called “private placement” to avoid scrutiny by our Securities Commission (SecComm).
It was never clear how Holding Co would be marketed to cautions investors, since none of our licensed securities dealers were brought into the picture to play their usual role of acting as investment bankers for new share offerings, particularly for ones as large as $70 million. Apparently their professional expertise was considered unnecessary.
Together with many others, I expressed my doubts about this scheme, as it seemed to violate public policy by using a questionable loophole to evade SecComm jurisdiction. Our doubts were shared by the FNM Cabinet, who announced early this year a “delay” in implementation. Then just last month Attorney-General Bethel made the clear-cut decision to ditch the whole scheme with a more rational plan.
The ALIV shares will be sold in a public offering but only under the long-standing regulation that ALIV must first complete three full fiscal years and produce financial statements for the period. This will delay any offering until 2019 at the earliest, allowing Government to determine that ALIV has developed a solid track record to justify investment by the Bahamian public. Under regulation by SecComm, ALIV shares would be listed on BISX, not only giving ALIV a true market value but also giving a better benchmark for valuing Cable Bahamas, with continued ownership of 48.25 percent of ALIV’s equity. With both companies listed on BISX we can observe how ALIV may eventually become the larger company and stimulate investor interest in trading on our securities exchange.
The Attorney-General must be congratulated for making this firm decision on behalf of his Cabinet.
Originally published at The Tribune and posted here with the authors kind permission.
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. He has recently released his autobiography, A Corkscrew Life: Adventures of a Travelling Financier.
