EDITOR, The Tribune. Having read your articles on the Bahamas Real Estate Asso ciation (BREA few weeks, I became intrigued on what all of the fuss and apparent hostility was about. In the spirit of keeping an open mind I decided to attend the Annual General Meeting on Thursday, March 24, 2011. To say the least, I was shocked at the incredible turnaround the Association finds itself in just a short year under the current President and Board. Miss Patricia Ann Keller Birch and BREAs Board have brought the Association out ofa debt crisis deeper than the pit of hell and have put the Association on sound financial foot ing, an incredible feat in these dire economic times. Miss Birch is a tireless, energetic, selfless Bahamian woman! From her hospitality days in Andros decades ago, to becoming one of The Bahamas leading Bro kers, and now becoming an exceptional President for BREA, I say a job very well done! Without sounding condescending I say Miss Birch and the Board should take bow for enhancing the integrity, disci pline, and financial foundation of the Bahamas Real Estate Association. I am so proud of everyone on the Board and am honoured to call Miss Birch my Bahamian sister. Good luck in the upcoming year of what is for sure to be challenges and your member ship supports you. CHRISTOPHER ARMALY Nassau, March 25, 2011. E DITOR, The Tribune. M r. McCartney recently resigned from the governm ent, (as he should have remaining in Parliament as an i ndependent MP, and rumour h as it he will start a new political party to contest the next g eneral election. U pon hearing this one of my nephew's e-mailed from A baco to say how exciting this was and felt this new par-t y would win if they could field some good candidates. My response, after consulting my political crystal b all, was that he might not e ven win the Constituency he c urrently represents, (Bamb oo Town) again, much less the government based on what we know about him and his policies and how he prop oses to implement them to date. Exactly what do we know a bout Mr. McCartney so far? 1. He thinks illegal H aitians should be repatriate d. 2. He thinks Bahamians s hould be able to succeed. 3. He is opposed to Cable & Wireless buying BTC. N ow what do we find when w e look at what the FNM and PLP think about these things? Believe it or not, Mr. M cCartney, or "Bran" as he is a ffectionately known, agrees with both the major political p arties on the first two points, and agrees with the PLP on the third, since they changed their position on privatisation that is. So what's he got that t he other two parties don't have? Problem is we don't k now yet. U ntil Mr. McCartney releases a position paper on major issues and how he will "plan or fix" things so Bahamians can get to know him, he stands for nothing o riginal at this point. In fact h e just might be so nationali stic that he sets the country back even further than the devils" we know. This quote from Nobel L aureate and economist, F.A. H ayek from his masterpiece, The Road to Serfdom, seems a ppropriate: The effect of the people's agreeing that there must be c entral planning, without agreeing on the ends, will ber ather as if a group of people were to commit themselves to take a journey together without agreeing where they want t o go; with the result that they m ay all have to make a journ ey which most of them do n ot want at all." In the meantime it will be fun watching the political posturing until his cards are p layed for all to see because at this point Mr. McCartney is little more than an enigma. RICK LOWE N assau, M arch 27, 2011. E DITORIAL/LETTERS TO THE EDITOR P AGE 4, MONDAY, MARCH 28, 2011 THE TRIBUNE The Tribune Limited NULLIUS ADDICTUS JURARE IN VERBA MAGISTRI Being Bound to Swear to The Dogmas of No Master LEON E. H. DUPUCH, Publisher/Editor 1903-1914 SIR ETIENNE DUPUCH, Kt., O.B.E., K.M., K.C.S.G., (Hon. Publisher/Editor 1919-1972 Contributing Editor 1972-1991 EILEEN DUPUCH CARRON, C.M.G., M.S., B.A., LL.B. Publisher/Editor 1972Published Daily Monday to Saturday Shirley Street, P.O. Box N-3207, Nassau, Bahamas Insurance Management Building., P.O. F-485, Freeport, Grand Bahama W EBSITE www.tribune242.com updated daily at 2pm AFTER a 14-year search for a suitable strategic partner and a lengthy, often acrimonious debate over the past few days, BTC opens its doors today as a privately owned company. Cable & Wireless, with a sound international reputation and solid financing is the new owner. Bluewater Ventures Ltd, the choice of the PLP government, is now history leaving a trail of mystery in its wake. When one examines details of the bids that were published, it is difficult to understand why Bluewater the only company not to produce financials was the PLP governments company of choice. Many things have been suggested. Finance Minister Zhivargo Laing considered it a fronting operation with Bahamians hidden in the background. Whatever it was, all that has been made public and much is still hidden suggests that it was a company hastily thrown together especially for this bid ding process. At the end of a heated exchange between Opposition leader Perry Christie, whose government pushed the Bluewater deal to a hasty conclusion, and Prime Minister Ingraham who eliminated Bluewater, Mr Ingraham accepted that Mr Christies last gesture before he left office was beneficial to the Bahamas. As he put out the embers of his dying government, Mr Christie took up his pen and ended the Bluewater deal. I would recommend, he wrote, that the matter not proceed any further at this time. Mr Christie argued that as his govern ment had been voted out of office, it was only right that the final decision on the future of BTC be left for the new government. Reading from the records on Monday, April 30, 2007 two days before the gener al election Mr Ingraham said the PLP Cabinet met with Prime Minister Christies approval. Mr Christie himself was absent, and so the deputy prime minister was in the chair. Mr Obie Wilchcombe was also absent from that meeting. It was at that meeting that the decision was made to sell BTC to Bluewater. When asked by a House member what he knew about the Bluewater transaction, Mr Ingraham said he knew of a meeting also held at the Ministry of Finance when then Minister Bradley Roberts, Brave Davis, lawyer for Bluewater, and a man from Bluewater returned to the room and said we have a deal. Mr Ingraham said that before the 2007 election he had announced at an FNM rally that the PLP government had sold what was then BaTelCo to Bluewater. His specula tion was that at the end they ran scared, which caused the last minute change of mind. As our readers will recall the hand-over in 2007 from one government to the next did not go smoothly. Although the FNM became the government on May 2, it was not until May 4th that it was able to assume office. In the meantime several ministers of the former PLP government, said Mr Ingraham, went around announcing that the Bluewater deal had been approved and recommended that the persons involved should go to the Cabinet office to get the letter. By then the Ingraham government was in charge. Mr Ingraham said that the Secretary to the Cabinet came to him one day to inform him that some people were at the office saying that they wanted the letter obviously the letter approving the sale of BaTelCo to Bluewater. Mr Ingraham thanked Mr Christie for going to London to testify at the hearing when Bluewater was demanding to be indemnified for the loss of BaTelCo. In Bluewaters agreement with the PLP, the Ingraham government would have had to pay $2.5 million if the exclusivity clause in the agreement had been breached. To get out of the Bluewater deal, the $2.5 million penalty clause was negotiated down to $1.9 million. Mr Ingraham argued that although Mr Christie did not attend the Cabinet meet ing that approved the sale of BaTelCo to Bluewater, the fact that he had given Cabinet members permission to meet, and agreed who should chair the meeting, he could not then unilaterally rescind their decision with out another meeting and discussion. Mr Christie argued that he did not change the deal, but decided that his government was at an end and suspended it. Mr Ingraham knows, said an angered Opposition leader, that this was a process that I was going to guarantee the integrity of if only because Brave Davis was the lawyer I was not going to allow this mat ter to compromise the integrity of my gov ernment under no circumstances. In a heated moment, Mr Christie proba bly suggested more than he intended. Obviously, he was not happy with the deal. His behaviour at the end shows a great deal of doubt. Already he had started the hand washing process. Bluewater was a deal made on behalf of the Bahamian people. They are entitled to know the facts especially why Bluewater was given so many preferential concessions. We feel it the duty of the Ingraham government to lay the whole Bluewater transaction on the table of the House so that it will be available for public scrutiny. The enigma known as Branville McCartney LETTERS firstname.lastname@example.org What is the whole truth behind Bluewater? :$17('(;3(5,(1&(%22..((3(585*(17/<(('(' 352),&,(17,1,&.%22.6 $'0,1#+%60$5,1(&20 (;3(5,(1&(:(/'(5 $/80,1,80)$%5,&$7,21 $1',167$//(5(('(' RUHPDLOWR$'0,1#+%60$5,1(&20 EDITOR, The Tribune. I remember John Baily as the magistrate that gave us a stiff l ecture but no fine or jail time, after myself, then 19, along with my three friends appeared before him after the police charged us with trespassing on private property, after we createda disturbance in the lobby of the Sheraton British Colonial Hotel, now the Hilton Hotel, and then refused the doorman's demand to leave the hotel's property. That doorman was none other than the well known Mr. Ferguson, who I'm sure a lot of you will remember him as the rather full-size man who took no nonsense from anyone, much less four rowdy trouble makers. He was always decked out in his official spotless black and white doormans uniform, complete with his white helmet style hat. Mr. Ferguson, the Sheratons doorman/security guard for umpteen years, who regardless of the hour, morning, night or in the wee hours, if you turned around, there stood Mr. Ferguson, watching your every move. Nobody, and I mean nobody, could get away with anything if Mr. Ferguson was on shift. He was a wonderful and kind giant of a man, but even when I was years older I still didnt mess with him, Doorman Ferguson. I am happy to know a much older John Baily is still around. TAL RUSSELL Nassau, March 25, 2011. THE TIME JOHN B AILY GAVE US ASTIFFLECTURE Miss Bir ch and BREA Board should take a bow!
SECTIONB email@example.com MONDAY, MARCH 28, 2011 THETRIBUNE $5.10 $5.12 $5.11 B y NEIL HARTNELL Tribune Business Editor Bahamas First Holdings, t he Bahamian general insur a nce group, has told Tribune Business it will suffer absolutely zero financial impact despite a court awarding a $7 million judgment against its Cayman Islands subsidiary thel argest civil payout in those islands history. BAHAMAS FIRST: ZERO EFFECT FROM $7M CAYMAN AWARD SEE page 7B I ANFAIR B y NEIL HARTNELL T ribune Business Editor The offer to acquire the Grand Bahama Port Authority (GBPA investment vehicle linked to the Abu Dhabi Royal Family remains on the table but t alks appear to be going nowhere fast, sources close to the situation have r evealed to Tribune Busin ess, with the price offered a nd the one sought by the two shareholder families s ome way apart. Freeport w as a crowded town last w eek, with many of the principal players in the potential deal present in the city for one reason or another, with sources suggesting that at one point at least the Abu Dhabi offer was not j ust for the GBPA but for some, or all, of Hutchison Whampoas Freeport assets, t oo. W ith the principals in the d eal all based many thousands of miles from Grand B ahama, in locations such a s London, Abu Dhabi and H ong Kong, obtaining accurate information on the deals progress has been difficult. However, diligent investigations carried out over several weeks by Tribune Business have provide d a good indication, although all those spoken to requested anonymity. C hris Gray, the former H utchison Whampoa execAbu Dhabis Port offer still on table n But talks not progressing quickly, although round of meetings scheduled for Middle East early next month n Haywards and St Georgs said to want $300m collectively, some $100m more than initial offer n Deal said to have at one point included offer for Hutchisons Grand Bahama assets SEE page 5B By NEIL HARTNELL Tribune Business Editor Every investment fund category experienced a yearover-year decline in 2010 apart from SMART funds, Securities Commission of the Bahamas data hinting that this nation continues tol ose competitiveness in this f inancial services segment, the total number of funds registered here falling from7 88 to 753 a drop of 4.6 per cent. Every category of investment funds from year-end 2009 to 2010 experienced an overall decline except for SMART funds, the Com mission said in its latest industry report publication. The decline is a result of the number of investment funds that have liquidated, are in the process of liqui dating and have transferred out of the jurisdiction. SMART, or Specific Mandate Alternative Regulatory Test funds, are likely to be doing well because they are DOMICILED FUNDS DROP 4.6% IN 0 All investment fund categories apart from SMART funds in decline, says Commission* Standard and Foreign Funds drop 15% and 14% respectively Only growth category Financial and Corporate Services Providers SEE page 8B By ALISON LOWE B usiness Reporter firstname.lastname@example.org Although lacking the direct taxation employed byi ts Tax Information Exchange Agreement (TIEA Ministry of Finances top legal advisor believes the B ahamas could use these t reaties to help crack down o n its own tax evaders. W hile acknowledging that it is not clear whether the G overnment will seek to use the TIEAs for this purpose, Rowena Bethel said thatd espite initial perceptions t hat the benefits from the 24 a greements would only flow in only one direction, information gathering for tax evasion investigations in the Bahamas is a benefit thisn ation could gain from the agreements. The Bahamian governm ent now has the ability to go to the tax authority over there and get whatever infor-m ation is held there to assist with whatever investigation is being done here....We can do that in relation to all of the TIEA tax evasion probe benefits SEE page 10B By ALISON LOWE Business Reporter a email@example.com Claims that Bahamasair is e ngaging in unfair and predatory business strategies tot he detriment of the domestic avi ation industry have been dis missed by a government minister as utter nonsense. Captain Randy Butler, Sky Bahamas chief executive, charged last week that the "game is fixed" against the Airline s pr edator y price claim is utternonsense SEE page 6B B y ALISON LOWE B usiness Reporter firstname.lastname@example.org Kerzner International (Bahamas r eiterated that the Atlantis owners operations remain v ery strong with ample liquidity, as media reports persists that the companyc ould default on a multimillion dollar debt as early a s next month, leading to refinancing of its $3 billion t otal debt, asset sales or ownership changes. A Bloomberg news artiKerzner: $3bn debt restructure to be seamless Atlantis chief says operations remain very strong w ith ample liquidity to invest in properties Says no impact on Paradise Island operations, despite Bloomberg storys fears of default as early as next month G EORGE MARKANTONIS SEE page 9B CAPT. RANDY BUTLER
B Y ROYALFIDELITY C APITAL MARKETS It was yet another busy week of trading in the Bahamian stock market. Investors traded in 13 out of the 24 listed securities, with f ive advancers and two d ecliners. EQUITY MARKET A total of 47,736 shares changed hands, representing an increase of 3,038 shares compared to the pre-v ious week's trading volume o f 44,698 shares. F inance Corporation of t he Bahamas (FIN big advancer, trading a volume of 1,500 shares to see its stock price increase by $1.40 to close at $7.50. Cable Bahamas (CAB d ecliner, trading a volume of 2,250 shares to see its share price fall by $0.18 to close at $9.25. Leader AML Foods (AML t he volume leader, trading a volume of 13,614 shares, i ts stock increasing by $0.10 to close at $1.19. Bank of the Bahamas (BOB 1 1,021 shares, climbing $0.27 t o close at $5.20. F OCOL Holdings (FCL t raded a volume of 1,200 s hares, its stock price increasing by $0.01 to close at $5.48. Commonwealth Bank ( CBL) traded a volume of 12,330 shares to close unchanged at $6.82. ICD Utilities (ICD ed a volume of 1,550 shares, its stock declining $0.10 to c lose at $7.30. B OND MARKET Fidelity Bank Bahamas Series C Notes (FBBSC traded a volume of $2,000 notes at par value. F idelity Bank Bahamas Limited Series D Notes (FBBSDo f $3,000 notes at par value. COMPANY NEWS Earnings Releases: T here were no earnings report released last week. D ividend Notes: C ommonwealth Bank ( CBL) has declared a dividend of $0.06 per share,p ayable on March 31, 2011, t o all ordinary shareholders of record date March 21, 2011. Cable Bahamas (CAB has declared a dividend of $0.08 per share, payable on M arch 31, 2011, to all ordin ary shareholders of record date March 18, 2011. B USINESS PAGE 2B, MONDAY, MARCH 28, 2011 THE TRIBUNE RoyalFidelity Market Wrap EQUITY MARKET TRADING STATISTICS Week ending 25.03.11 BISX CLOSING WKLY PRICE VOLUME YTDPRICE S YMBOLPRICECHANGECHANGE AML$ 1.19$0.1013,61422.68% BBL$ 0.18$-00.00% BOB$ 5.20$0.2711,0216.12% BPF$ 10.63$-00.00% BSLN/A$-00.00% B WL$ 2.70$-2500.00% CAB$ 9.25$-0.182,250-11.57% CBL$ 6.82$-12,330-2.57% C HL$ 2.40$-2,0000.00% C IB$ 9.30$-1,460-0.96% C WCB$ 2.27$0.0256124.04% D HS$ 1.40$-0-12.50% F AM$ 5.25$-0-13.51% F BB$ 1.96$-0-9.68% FCL$ 5.48$0.011,200-0.37% FCLB$ 1.00$-00.00% FIN$ 7.50$1.401,5003.73% ICD$ 7.30$-0.101,550-1.35% JSJ$ 9.82$-00.00% PRE$ 10.00$-00.00% I NTERNATIONAL MARKETS F OREX RatesWeekly %Change Currency CAD1.01890.32 GBP1.6046-1.22 EUR1.4088-0.69 C ommodities Weekly %Change Commodity C rude Oil115.971.67 Gold1,436.001.13 BOND MARKET T RADING STATISTICS B ISXDESCRIPTION VOLUME PARVALUE SYMBOL F BB13FBB Series C 2$1,000 N otes Due 2013 FBB15FBB Series D 3$1,000 Notes Due 2015 FBB17FBB Series A0$1,000 N otes Due 2017 FBB22FBB Series B0$1,000 Notes Due 2022 I NTERNATIONAL STOCK MARKET INDEXES I ndexWeekly% Change D JIA12,220.59 3.05 S&P 500 1,313.80 2.70N ASDAQ 2,743.06 3.76 Nikkei9,536.13 3.58 INSIGHT For the stories behind the news, read Insight on Mondays
B y ALISON LOWE B usiness Reporter a email@example.com The Bahamas Electricity C orporation (BEC i ng to negotiate a reduction in the length of time and c ost of a contract it is soon to award for the installation of an upgraded 10.5 mile transmission line, which will allow the new Wilson City Power Plant to fully serviceA bacos power needs, after t he lowest bid came in at $4.6 million. Expectations of when that k ey power line will be fully operation have now been pushed back from an initial mid-May completion, as sug-g ested by Minister for the Environment, Earl Deveaux, in January, to an end of June, early Julyd ate, Tribune Business has been informed. While no contract has yet been formally signed, it is likely the contract for the upgraded lines installationw ill go to a joint venture group led by a Canadian company, K-Line International, who will be responsi b le for the engineering and material procurement, in c onjunction with a Bahami an company called Triple W General Contractors. Triple W will undertake the physic al construction work on the p roject. K -Line International specialises in engineering, d esign, procurement, cons truction, commissioning and maintenance of highv oltage power delivery systems, while Triple W is said to have constructed several major power lines for BEC and been involved in electrical infrastructure installa-t ion for private developers. T ribune Business understands that the joint venture group submitted the lowestb id from among a group of potential contractors in a closed tendering process, where several contractorsd eemed competent were selected and invited to make a bid. The closed process was u sed due to the need for the project to be completed in an expedited timeframe, a source close to the matter told Tribune Business. Work is now expected to begin ase arly as next week. Officials from BEC and the Bahamas Environment Science and Technology( BEST) Commission joined Peter Medford operations m anager for Triple W as a survey of the proposed route for the line was conducted l ast week. The transmission l ine is needed so that an enhanced power voltage can be carried from the Wilson City power plant, which is capable of producing up to 48 megawatts of power.A bacos peak summer powe r demand at present is around 25 megawatts. B ECs Marsh Harbour Power Plant was last year incap able of fully meeting this d emand, leading to lengthy a nd ongoing blackouts for several months and a negative impact on businesses, residents and tourists. B EC has committed to u ndertaking upgrades of its g eneration equipment at the Marsh Harbour Plant to e nsure that peak demand c an still be met ahead of the new plant and power line becoming fully operational. T his investment would not be a waste, BEC chairman Michael Moss previo usly told Tribune Business, as the generation units will be moved to other locations a fter they are no longer needed in Abaco. BUSINESS T HE TRIBUNE MONDAY, MARCH 28, 2011, PAGE 3B BEC seeks reduced time, cost on $4.6m power line M ICHAEL MOSS EARL D EVEAUX Share your news The Tribune wants to hear fr om people who ar e making news in their neighbour hoods. Per haps you ar e raising funds for a good cause, campaigning for improvements in the area or have won an awar d. If so, call us on 322-1986 and share your story.
B y ALISON LOWE B usiness Reporter firstname.lastname@example.org Pulling increased Canadian foreign direct investment and tourists to the Bahamas, and raising awareness of this nations economic and busin ess offerings, are the intended outcomes of a trade and investment promotion tour led by Prime Minister Hubert Ingraham, along with several key Cab-i net ministers. Minister of state for finance, Zhivargo Laing, who is one of those minist ers, told Tribune Business that Canada made sense as a destination for a trade a nd investment promotion t our at this time for several r easons, both practical and strategic. Firstly, we are in Calgary, C anada, to attend annual meetings of the Ministers of F inance of the Americas and the Inter-American Develoment Bank. Thesea re official meetings attended by ministers annually. W e thought to take advant age of our time in Canada to do some trade and investm ent promotion, Mr Laing s aid. As you know, Canada fared well during the recent crisis, has recovered better than many developed countries and has a strong currency. We also recently con c luded a Tax Information E xchange Agreement with Canada that has some double taxation provisions. Calgary is a good source of tourists for us, having direct flights by West Jet. For all these reasons, Canada made s ense. M r Laing, the Prime Min i ster and the rest of the g roup left the Bahamas this w eekend for Canada. T he minister said the Government team will be taking the message to Cana da that, along with a long history of political and economic success, investors should consider the B ahamas because we have and are considerably transforming our business envir onment to ensure the greate st ease of doing business, a s well as compliance with international best practices in regulations, and we are aj urisdiction with a diversity o f offerings that makes us o ne of the best places in which to live, work and visit. Helping to push this message along with Mr Ingraham and Mr Laing are Minister of Tourism, Vincent V anderpool Wallace, Attorn ey General and Minister of L egal Affairs, John Delaney, r epresentatives of the B ahamas Investment A uthority, including the Director of Investments, the Bahamas Maritime Author ity, the Bahamas Financial Services Board, the Nassau Airport Development Com pany, Heads of the Nassau/P aradise Island Promotion Board and Out Island Promotion Board, the Bahamas R eal Estate Association, the G rand Bahama Port A uthority and BORCO. Potential investors, business persons, lawyers,a ccountants and the Canadian media are on the list to meet and greet. I n a press conference on Friday in which he discussed the trip, Mr Ingraham noted that a luncheon scheduledt o take place at the Toronto B oard of Trade, during which both government andp rivate sector presentations w ill be made to promote the Bahamas, some 218 people are registered to attend. Other seminars and lun c heons are planned, including BFSB-led seminars in both Calgary and Toronto on business and investment opportunities in this nation. New promotional material in the form of an updatedv ersion of a booklet entitled T he Bahamas A Paradise for Many Reasons and three individual flyers, for tourism, financial services and GrandB ahama, will be taken for dissemination in Canada. B USINESS PAGE 4B, MONDAY, MARCH 28, 2011 THE TRIBUNE Government targets Canada FDI, tourists ZHIVARGOLAING
utive who previously headed its Grand Bahama-based Freeport Container Port and F reeport Harbour Compan y, and is now the point man for the Abu Dhabi o ffer, was said to multiple s ources to have been in F reeport for several days last week on an agenda thati ncluded meetings at the G BPA. lot of people have seen him, one source added. What was discussed is unclear, but also in Freeport were said to be several members of the late Edward S t Georges family, plus a k ey behind-the-scenes G BPA power broker, D erek Harrington. Sir Jack H ayward, who heads the f amily holding the remaining 50 per cent GBPA stake, was said to have been in Fort Lauderdale. And also present in the Bahamas second city was said to have been John M eredith, the Hong Kongbased head of Hutchison Port Holdings, the cong lomerates worldwide ports d ivision. H owever, Tribune Busi nesss sources cautioned that he was unlikely to be in theB ahamas to discuss the Abu Dhabi deal, his priority instead being to sort out Hutchisons troubled OurL ucaya resort, which recentl y laid-off 200 staff. Hutchi son is understood to have restructured its Freeport-b ased assets to place them under the control of the Container Port and Hutchi son Port Holdings, and thereh as been speculation that the company wants to again take over management of the property and place it under its Harbour Bay b rand, which has been successful in Asia. Assets T his newspaper, though, was informed that at one stage, at least, the Abu D habi offer included some o r all of Hutchison Whamp oas Freeport assets. Sources familiar with devel-o pments, though, suggested t hat Mr Meredith was cool to the prospects of any such transaction either as a cash transaction or asset swap especially if the Freeport Container Port was includ ed, given that its geographicl ocation off the US east c oast and near the Panama Canal approaches, make it o f vital strategic importance. Theres a lot of rumours going on right now with regard to this whole Abu Dhabi deal, one source toldT ribune Business. Theres a lot of misinformation going around right now. As far as I know, there is n o deal, there hasnt been a deal. Theyre still talking, and are heading over to meet in Abu Dhabi in earlyA pril. Suggesting that the St George and Hayward fami l ies were themselves unsure of what they wanted, the source said: Maybe theyre looking for a strategic partner, maybe they want to sell. I dont think they know. In response to the initial offer, which was said to have c ome in January 2011 from a n Abu Dhabi Royal Fami l y investment vehicle that holds a significant share-h olding in Dubai Ports W orld, the Haywards and St Georges are understood to have informed the suitor that they considered the bid low. However, they have also asked JP Morgan, the i nvestment bank, to crunch t he numbers and do a financial evaluation of the GBPA a nd its Port Group Ltd affili ate to determine their true v alue. The fact they are here meeting is helpful, but they are very far apart on price. The families want $300 million, but Abu Dhabi is offer i ng $200 million maybe less, one source close to developments told Tribune Business. Somethingsc ooking; well have to see h ow it play out. Such pricing would value the Hayward and St Georges takes at $150 million each. Sir Jack told a UK newspaper earlier this year that he wanted million (close to$ 130 million) for his GBPA stake. Tribune Business reported last year that the Haywards and St Georges had appoint ed JP Morgan to search for a buyer for their respective 50 per cent stakes, althoughS ir Jack at the same said that efforts to sell the GBPA would be akin to "flogging a dead horse". "It's not going to be an easy sell," Sir Jack said then, of his and the St George's search for a buyer for their respective 50 per cent stakes in the GBPA and Port Group Ltd. Asked whether both shareholders had appointed an investment bank to seek out the right purchaser and filter out all the unsuitable prospects, he added: "We h aven't at the moment. We're considering it, but I think they're flogging a dead horse." T he GBPA is something o f an unusual asset to a cquire, because apart from its equity stakes in numer-o us infrastructure-related a ssets such as the Grand Bahama Development Company and Freeport Harbour Company (and a host of other entities, such as Bourbon Street Ltd, owner of Lucaya Marketplace), it a lso retains quasi-governm ental powers as Freeport's r egulatory and government al authority. A ny buyer will thus have t o be of the highest repute and integrity, especially give n that they will have to meet with the Bahamian government's approval BUSINESS T HE TRIBUNE MONDAY, MARCH 28, 2011, PAGE 5B Abu Dhabis Port offer still on table F ROM page 1B As far as I know, there is no deal, t here hasnt been a deal. Theyre still talking, and are heading over to meet i n Abu Dhabi in early April.
p rivate sector due to the Government acting as both operator and regulator, whicha llows the national flag carrier to offer "predatory prices" u nderwritten by multi-million dollar taxpayer subsidies. Captain Butler suggested promotions such as Bahamasair's 'March Madness' campaign were anti-competitive with tickets sold "below market" value, safe in the knowle dge that its rivals could not follow suit, and that it would be protected by its taxpayer subsidy. "Why are we getting that from a government airline," C aptain Butler said, questioning the strategy behind s uch a move. Y et Neko Grant, who as m inister of works and transport has ministerial responsibility for Bahamasair, said the national flag carrier has as a player in the market, a rightt o market as they see fit to e nsure their share is not furt her eroded. Should Bahamasair, irrespective of being subsidised, sit on its hands and allow its market share to be eroded byt he very low fares Sky Bahamas and others continu e to offer? he questioned. Noting that Captain Butler has also recently boasted about off the chain growth a t Sky Bahamas, Mr Grant s tated: Where did that g rowth come from? He is talking utter nonsense [about predatory pricing]. Speaking to the Rotary Club of West Nassau lastw eek, Captain Butler sugg ested that Bahamasair s hould now be top of the list of government assets and entities set for privatisation, after the sale of the Bahamas Telecommunications Compa-n y (BTC less Communications. H e questioned whether the airline was living up to its mandate of bringing tourists to the Bahamas, and suggested that the best way forward for the airline should be conversion into an international long-distance carrier, with the primary role of bring-i ng tourists into this nation's i nternational airports from all o ver the world. H e said the airline could then partner with smaller, privately owned Bahamian airlines who would transport visitors to their chosen Family Island destinations once they arrived in Nassau or Freeport. Asked about the prospects for privatisation of the stateowned carrier, Mr Grant would not elaborate, stating simply: The Government hasn ot decided the way forward as it relates to privatisation. B USINESS PAGE 6B, MONDAY, MARCH 28, 2011 THE TRIBUNE FROM page 1B Airlines predatory price claim is utternonsense
Ian Fair, Bahamas Firsts chairman, said the case would have no impact on the insurance group because, having come up as a potential liability during due diligence, the potential f inancial ramifications from t he court case were ring f enced or excluded from the transaction that saw it last year acquire a 75.24 per cent majority stake in Sagic or General Insurance (Caym an). E xplaining that liability for any eventual payout w ould rest with the previo us owners, namely Sagicor, Mr Fair pointed out that the matter was also likely to be appealed, The issue arose after members of the Hurlstone family, and their companies, t ogether with Crawford A djusters (Cayman o thers, counter-sued Sagic or General Insurance (Caym an) for abuse of process a nd malicious prosecution. This resulted from an initial Sagicor writ that had claimed fraud and conspiracy against them, but was abandoned on the verge of trial in December 2008 w hen it was determined that the insurers allegations against them could not be s ustained. C ontacted in the US, w here he is currently on business, Mr Fair told Tribune Business that the Sagi-c or General-Hurlstone lawsuit was ring-fenced when Bahamas First purchased its m ajority stake in the Cayman general insurer, whichm eant any financial reperc ussions for the group were actually none. Impact The impact for Bahamas First is zero, Mr Fair elaborated, and its fully provided for in terms of the deal. Bahamas First is basically fully protected on this one. It did not form part of t he transaction. The financial impact on Bahamas F irst is totally zero. T he Bahamas First chairm an added that the Cayman court ruling was subject to likely appeal, and said: Its the previous owner that needs to determine whether an appeal is necessary. The Hurlstone plaintiffs h ad alleged that their characters and business affairs had suffered greatly as a r esult of the allegations b rought by Sagicor General I nsurance (Cayman it was called Cayman Gen-e ral Insurance Company. I t was claimed that Frank Delessio, the insurers now deceased vice-president, brought the initial action after suggesting that figures on work done at a development called Windsor Village h ad been inflated. It was b ased on a report later f ound to be erroneous at b est, and not inclusive of all r elevant costs for work d one. The Hurlstones were also subjected to a Mareva injunction that froze their assets. But the Cayman court found that Mr Delessios d islike of one of the plaintiffs was a key factor behind the initial allegations, and S agicor General was shown t o have never possessed a b ody of evidence capable of proving it was defrauded or was the victim of a conspir-a cy. Given that plaintiffs who obtained injunctions fraudulently or maliciously were to be held liable for their a ctions, the Cayman court a warded $6.938 million plus i nterest for loss of profit and loss of market share to Hurlstone Construction. Other damages were also awarded to the Hurlstones individually. In response, Cayman First said: Notwithstanding the fact that the matters at issue in the proceedings predate the involvement of the new majority owners, definitive s teps have been taken to e nsure that policyholder and o ther stakeholder interests are adequately protected. Assurances Further, the ultimate parent company of [Cayman F irst] has provided assura nces that it will take appropriate and timely steps to ensure that the capital base of the company is maint ained at a level to meet the r equirements mandated by t he Cayman Islands Monetary Authority. Cayman First said it had determined, based on existing information, that the companys capital and ability to operate will not be impaired by any ramifications associated with the judgment. BUSINESS T HE TRIBUNE MONDAY, MARCH 28, 2011, PAGE 7B BAHAMAS FIRST: ZERO EFFECT FROM $7M CAYMAN AWARD F ROM page 1B The impact for Bahamas First is zero, and its fully provided for in terms of the deal. Bahamas First isb asically fully protected on this o ne. It did not form part of the transaction. The financial impact on Bahamas First is totally zero. I an Fair
B USINESS PAGE 8B, MONDAY, MARCH 28, 2011 THE TRIBUNE a n investment fund product t ailored to meet the needs o f the Bahamas core private wealth management client base. They grew yearover-year by 6.8 per cent, from 264 in 2009 to 282 at December 31, 2010. The other categories, though, all showed declines. The number of Standard funds domiciled in the Bahamas fell by 14.6 perc ent year-over-year, from 82 to 70 at year-end 2010, while Professional Funds dropped by 6.2 per cent to 243 from 2 59. Meanwhile, Recognised Foreign Funds dropped by 1 3.7 per cent, from 183 at y ear-end 2009 to 158 a year l ater. And, combined with the e ffects of the recession and s tock market plunges, the net asset values (NAVs t otal value of assets under management in Bahamasdomiciled funds also continu ed to fall as funds liquidated or moved jurisdiction. W hile the figures for 2010 are not yet available, they are likely to represent fur-t her declines in what has taken place in previous y ears. Despite the fall in fund n umbers and their NAV asset values, the number of Bahamas-based fund admini strators has remained flat over the past two to three y ears. After falling from 66 a t year-end 2008 to 64 in 2009, their total recovered slightly to 65 at year-end 2009. During 2010, there was an increase of one Unrestricted and one RestrictedI nvestment Fund Adminis t rator, the Securities Commission said. Exempt Investment Fund administrators decreased by one. S till, all this adds up to an i mpression of a Bahamian f und administration and management segment that i s not growing. While the recession and stock market downturn are important factors, it is clear that the Bahamas has also been unable to counter the competitive threat posed by the l ikes of the Cayman Islands, t he so-called offshore l eader for investment funds. The Bahamian securities industry, too, remains stable, with the total number of registered Bahamasd omiciled firms increasing from 112 at year-end 2009 t o 115 at December 31, 2010. While the number of Broker/Dealer 1s remaineda t 17, Broker/Dealer IIs g rew from 47 to 48, while Securities Investment Advisors expanded from 48 t0 50. During the year, Broker/Dealer II firms experi e nced an overall increase of one firm (two firms were l icensed and one firm closed), while Securities I nvestment Advisors had an overall increase of two firms( six firms were licensed and four firms were no longer l icensed), the Securities Commission found. There was better news, though, on the Financial and C orporate Services P roviders front. The total number registered rose yearover-year to 282 at December 31, 2010, compared to2 67 the year before. D escribing this as a more s ignificant increase compared to the previous year, t he Securities Commission said: In 2010, the overall number of renewal licenses increased by seven, while the overall number of new licenses increased by eight (compared to 2009, which s aw an overall increase of 1 5 renewals and a decrease o f 14 new licences). On the legislative front, the Securities Commission said it had begun moved to amend the template for the S MART Fund four model so as to allow any legal entit y, rather than just private investment companies, to be eligible for licensing as thism odel. The work is being d one in collaboration with the Bahamas Financial Services Boards (BFSBW orking Group. Comprehensive reviews of t he Investment Funds Act and Financial and Corpor ate Services Providers Act will also be conducted this y ear. To determine which comp anies require licensing as Financial and Corporate S ervices Providers, the Commission has adopted the World Trade Organisation (WTO t hese entities. DOMICILED FUNDS DROP 4.6% IN 0 FROM page 1B During 2010, there was an increase of one Unrestricted and one Restricted Investment Fund Administrator.E xempt Investment Fund administrators decreased by one.
BUSINESS T HE TRIBUNE MONDAY, MARCH 28, 2011, PAGE 9B c le late last week suggested t hat people with knowledge of the matter believeK erzner International Holdi ngs, the company which built and owns Atlantis and the One & Only Ocean Club on Paradise Island, faces a loan covenant test which could trigger a defaulton a $450 million debt as e arly as next month. I n a Friday statement r eleased in response to Trib une Businesss queries, George Markantonis, presid ent and managing director of Kerzner International ( Bahamas), said: As we have addressed previously, Kerzner International is inc onstructive discussions with our lenders. This process w ill be seamless for our employees, our guests and the communities in which w e operate. Our operations remain very strong, and the compa ny has ample liquidity to c ontinue to invest in our p roperties and our people. We continue to provide ourg uests with the ultimate t ravel experience. Such claims continue to come after it was revealed last year that Kerzner had h ired Blackstone Group LP a nd lawyers, Kirkland & Ellis LLP, as advisers on the r estructuring of a total $3 b illion in debt that it took o n when Sol Kerzner and his late son, Butch, took the company private in 2006. I n a previous statement about the restructuring, the noted that the impact of the economic downturn over the past several years resulted in a business climate that was not anticipated prior to2 008. H owever, Mr Markanto nis said at the time he expects the debt restructur-i ng to be concluded favourably. In the Bloomberg article published last Friday, it was a lleged that sources close to t he matter believe Kerzner may fail the test on an e stimated $450 million port ion of the total $3 billion d ebt that it owes numerous creditors as soon as next month. The debt is backedi n part by management contracts and equity in some properties, said the article. A default on so-called operating company debt may lead to the refinancing of Kerzners $3 billion totald ebt, asset sales or owners hip changes, according to Bloombergs sources. Restructuring advisers havec ontacted hedge funds and private-equity firms, including Paulson & Company, about investing new equity, b ut no agreements have b een reached, one of Bloombergs sources c harged. K erzner International has s truggled with the debt since the 2008 financial crisis hit hotel values, visitor arrivalsa nd room rates. Future threats include the opening of a new competitor in the form of the Baha Mar resort on Cable Beach, and the fact Kerzner Interna tional will lose a 2.5 per cent r oyalty fee the company coll ects on revenue from the Mohegan Sun casino in Connecticut at the end of2 014, noted Bloomberg. Kerzner: $3bn debt restructure to be seamless FROM page 1B T OURISMMAGNET: A tlantis in Paradise Island.
B USINESS PAGE 10B, MONDAY, MARCH 28, 2011 THE TRIBUNE t reaties weve signed, Ms Bethel said, during a presentation to the Institute of Internal Auditor at Breezes Superclub last wekk. She added that despite lacking income tax, the B ahamas does impose other subtle taxes, in the form of business license fees, property tax, import duties and stamp tax. So, for example, you may have a property owner who i s presenting different facts a bout an asset here in the Bahamas to other authorities that may assist us in determining whether the proper assessment is being done on that property here. We alson ow have the opportunity, in terms of imports coming into t he country, to ascertain what the true value is in order to determine the true duty...s aid Ms Bethel. She suggested that such information could b e readily gathered with the assistance of a foreign authority via the provisions of a TIEA with a partner nation. M s Bethel mentioned this potential as one of four main benefits of having a wide TIEA network. However, she admitted that this is not the primary motivationb ehind the signing of the 24 TIEAs the Bahamas currently has in place with other nations, and the indefinitely larger number that may be on the way. Standards In addition to the12 TIEAs that were required by the OECD for each country to be removed from its 2009 grey list of countries deemed not cooperative or not fully cooperative with international standards on tax information exchange, Ms Bethel notedt hat today the standard has evolved to the point where t he expectation is that all countries will sign agreements w ith anyone who comes knocking. They are now asking for j urisdictions to sign TIEAs with all relevant partners. T here is some discussion over what relevant partner means, but essentially it means anyone who comes knocking. All countries are required to broaden their network, Ms Bethel explained. She added that since 2009 the number of TIEAs in exis-t ence exploded to around 450 globally. The Bahamas, with 24, is not significantly further ahead in the number of TIEAs it has signed in comparison to its regional competitors, and some coun-t ries now have more than 100 TIEAs. Within TIEAs there are provisions for access by partner countries to information held by a government authori ty or financial institution w ithin the other countrys borders that may be foreseeably relevant to the other country as it seeks to enforcei ts domestic tax laws. M s Bethel noted that aside from ensuring our removal from negative lists such as t he OECD grey list in 2009, t he signing of TIEAs received positive recognition of achievement by majore conomies, such as the US, Canada and Mexcio. A wide TIEA network also opens avenues for strengthe ning and growing trade relations with other economies, suggested the attorney, with broader and deeper commercial and economic ties a possible outcome of ther emoval of the lack of transparency that may have seen citizens of certain OECD nations penalised by their home countries for investing in the Bahamas. Ms Bethel added: In a g lobally integrated community and open economy such as that which we have, where we seek to broaden, deepen and widen our economic competitiveness, for me (TIEAs v ery valuable tools for buildi ng the framework that will advance that particular objective. Without it we would be at a bit of a disadvantage in t erms of being able to properly position ourselves in the global framework. Without t hem there is the threat that c ountries will be squeezed out, because there is a fear that the transparency beingo bserved in the global com munity is not being observed in that country. There are a dvantages to be gained by a dapting to the new context. TIEA tax evasion probe benefits FROM page 1B
ELAINE KURTENBACH, AP Business Writers SHARON SILKE CARTY, AP Business Writers TOKYO The auto industry disruptions triggered by Japan's earthquake and tsunami are about to get worse. In the weeks ahead, car buyers will have difficulty finding the model they want in certain colors, thousands of auto plant workers will likely be told to stay home, and companies such as Toyota, Honda and others will lose billions of dollars in revenue. More than two weeks since the natural disaster, inventories of crucial car supplies from computer chips to paint pigments are dwindling fast as Japanese factories that make them struggle to restart. Because parts and supplies are shipped by slow-moving boats, the real drop-off has yet to be felt by factories in the U.S., Europe and Asia. That will come by the middle of A pril. "This is the biggest impact ever in the history of the automobile industry," said Koji Endo, managing director at Advanced Research Japan in Tokyo. Much of Japan's auto indust ry the second largest supplier of cars in the world remains idle. Few plants were seriously damaged by the quake, but with supplies of water and electricity fleeting, no one can say when factories will crank up. Some auto anal ysts said it could be as late as this summer. H itachi Automotive Systems, which makes parts such as airflow sensors and drive control systems, is waiting for its suppliers to restart while dealing w ith its own problems. Its plants are without water and gas, and have rolling electricity blackouts. Workers are repairing crumpled ceilings, fallen walls and cleaning up shattered glass. A spokesman said he doesn't know when its plants w ill reopen. The uncertainly has supplie rs, automakers and dealers scrambling. And it exposes the vulnerability of the world's most complex supply chain, where 3,000 parts go into single car or truck. Each one of those parts is made up of hundreds of other pieces supplied by multiple companies. All it takes is for one part to go missing or arrive late, and a vehicle can't be built. When General Motors briefly shut a pickup plant in Shreveport, Louisiana, due to a lack of parts, it caused the partial closing of a New York factory that supplies engines for those trucks. Sweden's Volvo has warned that its production could be disrupted because it is down to a week's worth of some parts. Car buyers will soon see higher prices and fewer choices. Some car colors will be harder to get because a paint pigment factory in Japan was damaged and shut production. As a result, Ford is telling dealers to stop ordering "tuxedo black" models of its F-150 pickup and Expedition and Navigator SUVs. It's also shifting away from some reds. The moves are precautionary, Ford said. Chrysler told dealers it was temporarily restricting orders of vehicles in 10 colors. That worries some dealers, especially when popular colors like black could be in short supply "It's hard enough to sell a $60,000 Navigator in this economy," said Fortunes O'Neal, general manager at Park Cities Ford in Dallas. "We don't want to have to tell customers, 'You've got to pick another color.'" Customers also face rising prices for models like Toyota's Prius, which is made only in Japan. Fears of falling supply have some dealers driving a hard bargain with customers who want the fuel-efficient hybrid as gasoline prices rise. Recent discounts of 5 to 10 percent on that car are disappearing. Japanese carmakers, who have shut most of their domestic plants, are warning that some of their overseas factories will stop running, too, in an effort to conserve supplies. Toyota and Honda expect shutdowns at North American plants. Honda said production could be interrupted after April 1. Even though most of its parts are sourced in the region, a few critical ones still come from Japan. Goldman Sachs estimates the shutdowns are costing the Japan automakers $200 million a day, which adds up to $2.8 billion for just the past two weeks. Each week of continued shutdowns costs $1.4 billion. By comparison, Toyota made $2.3 billion in all of 2010, and its sudden acceleration recalls cost $2 billion. The cost of damage from Japan's natural disaster could dwarf that recall, which was considered Toyota's biggest crisis ever. Much depends on how many spare components automakers have in stock which is probably very few. Japan's automakers spearheaded lean manufacturing, under which parts are delivered to plants the same day they are used. BUSINESS T HE TRIBUNE MONDAY, MARCH 28, 2011, PAGE 11B As Japan shutdowns drag on, auto crisis worsens (AP Photo/The Shreveport Times, file ASSEMBLY PLANT: This 2003 aerial file photo shows General Motors Corp.s Shreveport assembly plant and the surrounding area. The auto industry disruptions triggered by Japans earthquake and tsunami are about to get worse. When General Motors briefly shut the pickup plant in Shreveport, La., due to a lack of parts, it caused the partial closing of a New York factory that supplies engines for those trucks.
FRANCESCA LEVY, AP Business Writer NEW YORK The markets may be rational after all. The threat of severe nuclear contamination from a breached Japanese nuclear reactor still looms. The outcome of the escalating war in Libya is uncertain. Yet The Standard & Poor's 500 index ended the week up 2.7 percent. The Dow Jones industrial average rose 3.1 percent. So what happened to all that headline-driven volatility from two weeks ago? If you look at historical patterns, this week's rebound isn't so surprising. The numbers suggest stocks will likely keep rising for the next few months. Catastrophic events can move stock prices dramatically: at one point during the week after Japan's devastating earthquake and tsunami, the Dow gave up all its gains for the year. Within six trading days it had returned to where it was before the disaster. That may seem quick, but it's not. Brian Gendreau, strategist for the Financial Network, an advisory firm, studied the effect on the Dow of six major disasters. In all but one case the index declined at first, but returned to its pre-disaster level in an average of fewer than four days. In the fifth case, last year's oil spill in the Gulf of Mexico, it didn't decline at all. The Dow fell as much as 4.6 percent after each of the five other calamities Gendreau looked at: the 1979 nuclear accident at Pennsylvania's Three Mile Island; the 1986 Chernobyl nuclear accident; the 6.9magnitude earthquake that struck Kobe, Japan, in 1995; the 2004 Indian Ocean Tsunami; and Hurricane Katrina in 2005. The longest it took the Dow to recover was 15 days, after the Kobe earthquake. In the case of Chernobyl, the Dow recovered in a day. In that context, last week's stock recovery took slightly longer than average. T here's another clue that the rebound is for real, in spite of the recent dips and leaps in the market. It can be found in the 50-day moving average of the S&P 500, which measures the average value of the index over the most recent 50 days. Comparing an index level to its moving average shows what general direction the market is taking, without the interference o f short-term spikes and plunges. Analysts fretted when the S&P 500 fell below its 50day moving average on March 10. On Thursday, it climbed back above the average. But the moving average can also signal longer-term trends. Before March 10, the S&P 500 had stayed above its 50-day moving average for more than 100 days. That has only happened five other times since 1980, says Ryan Detrick, strategist for Schaeffer's Investment Research. After each of those blocks ended, the index rose by an average of 6 percent in the following three months. Four out of those five times, it rose an average of 3.3 percent after just a month. Then there's the macroeconomic view. Barry Knapp, chief economist for Barclay's Capital, says stocks are probably safe from a steep drop for the next six months. He expects the economy to follow the patterns of the last three recessions. In the last three economic downturns, the Federal Reserve started to unwind the interventions it had made to keep markets afloat well after the economic picture started to improve. Knapp calls the sixmonth periods leading up to each of those turning points in Fed policy a "sweet spot," and says the economy is in one now. The Fed raised interest rates in May 1983, six months after the economy began to recover from the 1981-1982 recession. The Fed waited nearly three years to raise rates after the recession that lasted from July 1990 to March 1991. And in January 2004, three years after an eight-month recession, the Fed reversed what Knapp calls its "unconventional policy" of pledging to keep interest rates low, although it didn't raise rates until June. Knapp expects the Fed to end its purchases of Treasurys, allow its balance sheet to shrink, and eventually raise interest rates between Septem ber and November. In past sweet spots, the S&P 500 didn't fall more than 7 percent. That's less than the 10 percent drop market analysts call a "correction," or a temporary downturn within a bull market. B USINESS PAGE 12B, MONDAY, MARCH 28, 2011 THE TRIBUNE Markets are more predictable than you think MARKETREBOUND: In this photo taken March 14, 2011, traders work on the floor of the New York Stock Exchange.