By IANTHIA SMITH
Prime Minister Hubert Ingraham
Prime Minister Hubert Ingraham said in the House of Assembly yesterday that despite criticism from every sector of society, "the government won't be derailed" in selling 51 per cent of the Bahamas Telecommunications Company (BTC) to telecom giant Cable & Wireless Communications (CWC).
Prime Minister Hubert Ingraham said in the House of Assembly yesterday that despite criticism from every sector of society, "the government won’t be derailed" in selling 51 per cent of the Bahamas Telecommunications Company (BTC) to telecom giant Cable & Wireless Communications (CWC). Details of the memorandum of understanding (MOU), which the government signed with CWC, were finally made public yesterday when Prime Minister Ingraham tabled the controversial document in Parliament. For a while now it had been a well-known fact that the sale of the company is for 51 per cent of BTC’s issued shares at a purchase price of $210 million. It was general knowledge that CWC will be responsible for paying the stamp duties up to a maximum of $7 million payable in connection with the transaction, but yesterday the prime minister revealed some key details of the deal. "BTC, at the date of sale will have a net cash of $15 million," the prime minister explained. "Net cash includes cash less financial debt. We expect there to be more than $15 million net cash in BTC’s balance sheet at completion, and we will therefore receive any excess cash. This excludes certain funds that are kept in a trust as BTC in part self-insures itself for catastrophic events. "The $210 million purchase price is based on certain assumptions as to the implementation cost of the workforce restructuring. Restructuring of BTC’s workforce would be undertaken as soon as practicable following completion on a purely voluntary basis. The voluntary workforce restructuring will be concluded by the first anniversary of completion." The MOU also reveals that CWC is required to prepare a business plan to cover the five-year period following completion. The government also agreed to amend the Communications Act and the sector policy to the extent controlled (directly or indirectly) by the government, for granting a second cellular licence, which could be launched prior to the third anniversary of completion; and that any third cellular licence would not be issued prior to the fifth anniversary of completion. The MOU also notes the intention to make BTC a major part of CWC’s overall regional operations and strategy, rather than an appendage of CWC’s existing regional operations, that BTC operates in a manner so as to improve and expand upon the existing communications services in The Bahamas, that there is substantial Bahamian participation in the management of BTC, and that Cable & Wireless affords Bahamians meaningful opportunities to work within its regional operations. The MOU also noted that although the day-to-day administration, operation and management of BTC will remain substantially in The Bahamas, certain aspects of the company’s administration, operation and management will be provided through their One Caribbean operational model. Any such functions are to be agreed between the government and Cable & Wireless and set out in the final voluntary workforce restructuring plan and services agreements, and on an ongoing basis the board will decide on any changes. However, the MOU added that the relocation overseas of any material part of the business, and certain aspects of the agreements, would still be subject to a veto by the government. "Even though Cable & Wireless will have management control, there are certain critical matters where the government will, so long as it holds 15 per cent of the company’s issued share capital, have the right to a veto that is to prevent certain actions being taken by Cable & Wireless if the government does not agree with them," he explained. "The more critical areas, though not all specifically laid out in the MOU, include: changes to the constitutional documents of BTC; changes to the share capital of BTC; material changes in the nature or scope of BTC’s business; borrowings by BTC that would exceed 2.5 times earnings and the sale of a material part of BTC’s business." He added that also includes any material acquisitions; relocation overseas of BTC or any material part of its business; contracts outside the ordinary course of business; transactions with the Cable & Wireless group subject to various conditions; important changes to any of the management services agreements with Cable & Wireless; any action to terminate the pension plan; and any redundancy exercise in the two years following the transaction. There are also terms in the MOU that relate to future sales of shares. There are a variety of clauses in the MOU that deal with protections with respect to future sales of shares. Prime Minister Ingraham added that the government has negotiated provisions to ensure transparency and accountability including that it will be able to audit the margins and costs charged and it will receive an annual report outlining the costs and benefits under the management services agreements. Any services will also be subject to certain veto rights by government on certain decisions such as changing the basis for charging fees. He said, finally, it should be noted that it is expected that LIME entities will receive certain services from BTC, and accordingly BTC will also receive fees for such services, so it is a two-way street. The government now expects to be able to complete the various approvals by the end of March.
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