Douglas Skeete
Accountant and head of the local corporate shareholders group Douglas Skeete expressed surprise in the news today at his findings after he did a quick and simple analysis of Barbados Light & Power (BL&P) balance sheet to determine the book value of its shares. One would have thought given his role as an Intervenor in the recent Fair Trading Commission (FTC) BL&P Hearing he would have been more than intimate with the disparity in BL&P’s book value per share and share price. After several days of discussion, the public is now being made aware by local commentators that simple analysis shows that the book value of BL&P shares maybe easily located in the $40-$50 range. We have been told the results of a study will be made public shortly to more accurately determine BL&P’s book value per share. The offer of $25.00 by Emera against the foregoing should now make for more interesting discussion.
On the 21 December the BU family would have been apprised by a source of the revelation which Douglas Skeete announced today:
BL&P, at $12.50/share, is valued on the BSE at $BDS 214m. At $BDS 25/share Emera are suggesting BL&P the company is actually worth $BDS 428m. Why this apparently generous price? Take a look at the 2009 BL&P’s accounts. Net asset value (ie all its assets minus all its liabilities) is sitting around $BDS 620M. Or something north of $BDS36/ share.
So on the face of it Emera are asking for a 30% discount on the intrinsic worth of the company. Course, some risk must be factored in – political (inc regulatory) for example – but Emera may actually be removing the other risk associated with current limited liquidity. Once wrapped up in the Canadian balance sheet any eventual resale ought to be greased by the higher liquidity an easier-to-sell structure offers.
The second point made by Douglas Skeete today in the news was to refute Rawdon Adams’ claim that BL&P is a national strategic asset. BU may not be able to offer a position with the eloquence of Rawdon Adams supported by the financial know how of Douglas Skeete but we pride ourselves on using heavy doses of commonsense. A government can deem any asset in the country to be strategic based on its strategic thinking or plan. At a critical juncture in our history where the push is on by the government to build out alternative energy programs, BL&P as the monopoly for power generation and distribution in Barbados must be seen as a strategic asset. Whether it is believed by Skeete and others that Emera can do the job becomes moot.
The final point raised in the news today was the questioning by Malcom Gibbs-Taitt of the role of Sir Neville Nicholls as Chairman of the Fair Trading Commission and Barbados Securities Commission. Douglas Skeete was quick to offer the position that to question the capacity of Sir Neville to deliver a professional decision in both capacities is wrong. BU begs to differ. BU believes Sir Neville’s refusal and the authorities to recognize that a clear conflict of interest exist in his continued roles as Chairman of the FTC and BSC is an insult to Barbadians. Here is how Wikipedia defines Conflict of Interest:
A conflict of interest (COI) occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other.
The emphasis on the word possibly is BU’s.
Barbadians will be observing closely how government decides on its NIS share holding in BL&P. The fact that Emera sent home 78 workers last week Friday maybe of passing concern to the management of BL&P.
My understanding is that no one entity currently controls Sagicor Financial Corporation. If and when a move is made to gain control, what quality of representation can the shareholders really expect from the Board of Directors? Recent events suggest mediocre:
- Recent sale of Sagicor shares to one entity rather than a rights offering to existing shareholders
- Recent convertible debt financing secured by Banks Holdings Limited rather than a rights offering to existing shareholders
- Recent move to have Barbados Dairy Industries Limited delisted, while shares are still held by minority shareholders
- Recent recommendation to shareholders to sell Light & Power Holdings shares below the assessed fair value
- Possibly other instances as well
Are the CEOs and Directors of our major Corporations mediocre at best, able to be tough with only the employees and their unions?
Why do Barbadians prefer to place their money on bank accounts for less than 2% interest?
What year did NIS purchase the BL&P shares? What was the price per share?
Unfortunately, I can only say that the NIS held most of its LPH shares prior to Dec 31, 2003 (http://www.blpc.com.bb/Photos/Corporate_Information.pdf). Older LPH reports may help to identify the year or even the major NIS purchase of LPH shares, but those before 2003 are not posted on the Internet. You probably need the NIS to provide such information.
In 1977 nis bought 300,000 shares
In 1998 was the conversion to L&P holding then the NIS has 28% of shares from what i can find share price was 4.16 with outstanding shares at 14,509,559. giving nis about 4 millions shares with that percentage.
In 2003 nis had 3.3 million shares.
In 2006 the Nis bought little over 660,000 shares in L&P holdings
Grand Bahama Power Company CEO resigns
By LEDEDRA MARCHE
FN Senior Reporter
lededra@nasguard.com
The Grand Bahama Power Company’s announcement yesterday of CEO Alan Kelley’s resignation was unexpected, according to Commonwealth Electrical Workers Union (CEWU) president, and now they intend to forge ahead with the new management team.
Kelley’s resignation was effective March 16, 2010, and, according to the company release, he intends to pursue other opportunities in the United States.
Kelley joined the Grand Bahama Power Company in (GBPC) December of 2009 and led the company under the direction of former majority owner Marubeni/Taqa.
Emera executive Ray Robinson will continue to lead the organization in his role as executive chairman of the GBPC and will begin the process to recruit a new CEO immediately, the release stated.
The engineer has been working on Emera’s Caribbean business for some time and joined the Grand Bahama team back in February.
Robinson was to concentrate his efforts on the building of the new diesel plant and a comprehensive technology-training plan for Bahamians, among other responsibilities.
“We thank Mr. Kelley for the contributions he has made to the business over the last 15 months,” Robinson said in the release. “I look forward to working more closely with the GBPC team to revitalize the utility for the benefit of the citizens of Grand Bahama and The Bahamas.”
Emera Inc. is a Canadian energy and services company which operates throughout northeastern North America, in three Caribbean countries and in California.
In late September 2008, the company initially purchased 25 percent of the shares in the GBPC for $41 million before becoming the majority owner with an additional 55.4 percent for $82 million.
That acquisition brought Emera’s interest in the GBPC to 80.4 percent.