The Bluewater Ventures Limited / Bahamas Telecommunications Company (BTC) Privatization deal that came close to reality

Bluewater Unveiled

By CANDIA DAMES
NG News Editor
candia@nasguard.com


A look at the BTC deal that almost was

The veil of secrecy surrounding the group that almost purchased 49 percent of the Bahamas Telecommunications Company (BTC) under the Christie administration is being lifted.

According to a closely guarded document obtained by National Review, Bluewater is a privately held entity, which does not have audited statements or disclose financial statements publicly.

“However, at signing or immediately prior to signing the [letter of intent] we are prepared to disclose relevant financial information and give the relevant assurances on Bluewater’s acquisition vehicle, including its financial capacity to complete the transaction,” the company said in 2006.

The response came as part of the due diligence exercise carried out by the Privatization Committee under the Christie administration, which subsequently recommended to the government that negotiations should proceed with Bluewater.

Members of that committee included the financial secretary, the legal advisor to the Ministry of Finance, BTC union officials, private sector members and telecommunications consultants.

As the government gets closer to closing a deal with Cable and Wireless Communications (CWC) to sell 51 percent of BTC, the Bluewater deal that almost came to be remains highly controversial.

Speaking at his party’s rally on Clifford Park Saturday night, Prime Minister Hubert Ingraham said if the Progressive Liberal Party (PLP) had its way BTC would have been sold off to Bluewater, which “had no experience in telecommunications. The company wasn’t even traded on the stock market.”

Ingraham said, “We still aren’t exactly sure who had their hands in that Bluewater pot or who the real players were behind a deal that would have purchased BTC on credit…”

Details of the deal that almost came to be are likely to be discussed in greater details in the BTC privatization debate, which gets underway in the House of Assembly today.

Ingraham has already promised to have more to say about Bluewater and what the Christie administration had planned.

In 2006, the privatization committee posed a number of questions to Bluewater, which were answered in detailed form in a document to the committee dated September 13, 2006.

One revelation made in that document is that Bluewater was formed to invest in and manage companies in the telecom and media industries.

According to the document, there was no plan for any layoffs. Between 2006 and 2011, average salary at BTC was projected to rise from $43,332 to $48,780.

Bluewater said in 2006 it would negotiate contracts with the existing management team between signing the letter of intent and closing the transaction.

“We anticipate that as a part of their package executive management will receive equity participation in BTC,” Bluewater said.

“Bluewater also anticipates that all board members will receive industry standard board compensation packages.”

A PLAN FOR BTC

Bluewater outlined 25 key initiatives to target in the first two years of purchasing the BTC shares.

It committed to plugging revenue leakages; reducing discounts to prepaid vendors; reducing bad debt charges; charging for in-home wiring to recoup costs; tightening the pre-paid card distribution process; instituting a new sales incentive scheme; reducing fleet maintenance costs; reducing overtime expenses and reducing contract service costs by 20 percent.

The company said that in the first year of the BTC acquisition it expected $92.5 million to be spent in capital expenditure to focus on consumers and core networks.

Asked to provide the supporting details and data for Bluewater’s proposed debt to equity ratio and any plans for external financing, Bluewater said it “does not intend to leverage BTC, so the net debt to equity ratio does not change during our projections.”

It also said it expected “all free cash flow after capital expenditure to be dividended to shareholders. This excludes current cash on the balance sheet which will be left at the company for working capital purposes.”

Bluewater also advised that it expected the cost of management and consultant contracts to be covered by the employee costs and the consultant costs in the business plan.

“In addition, we anticipate setting aside 10 percent of the equity of BTC for employees,” said Bluewater in 2006.

Under current plans for BTC, which appear poised to go through, the government says it will, by the end of this year, sell nine percent or approximately $40 million of the shares in BTC to the Bahamian public.

Bluewater said in 2006 that it did not intend to transfer or sell any of BTC’s shares for three years or any longer period of time as agreed by the shareholders.

The Bluewater plan also called for an improvement of EBITDA margins from 26 percent in 2005 to 39 percent in 2008.

The company said the improvement in EBITDA would have been achieved through the streamlining of operations.

The 2006 document to the Privatization Committee added, “Bluewater also intends to offer better value to its customers through reductions in wireless and international long distance tariffs as laid out in our business plan.”

The company had planned to launch an IPTV offering in 2009.

This would have included more than 1,000 movies on-demand “available to watch exactly when you want”; interactive music channels; on-demand movies and TV that you can stop, rewind, pause or fast-forward.

IPTV revenues were projected to be more than $9 million by this year.

The deal that came close to reality also included a plan for improving telecommunication services on less developed Family Islands.

THE BLUEWATER PLAYERS

The Privatization Committee asked Bluewater to provide the propose management candidates for BTC.

Several board members were named.

One of them was Trinidad and Tobago native Roger Ames, who served as chairman and chief executive officer of Warner Music Group and president of Warner Music International between August 1999 and August 2004.

Carlos Espinal who in 2006 was CEO of TSTT, the national telephone company of Trinidad & Tobago, was named as another Bluewater executive.

Prior to joining TSTT in 2004, he spent eight years with Verizon as senior vice president international - Latin America.

During his time with Verizon, he worked as a turn-around specialist for Verizon’s Latin American and Caribbean businesses, Bluewater said.

John Gregg was listed in the document sent to the Privatization Committee as managing director of Bluewater. According to that 2006 document, he had 15 years of building companies in the media and telecom industry in Europe, the U.S. and Asia.

Another board member named was Andrew Sukawaty, who was named as the chairman and CEO of Inmarsat, which Bluewater said was the world leader in global satellite communications.

According to the document, Sukawaty served as president and CEO of Sprint PCS, one of America’s largest mobile phone providers. It said he grew Sprint from a start up to a company with 9.5 million subscribers and approximately $6.6 billion in revenue.

Bluewater also named several operational advisors, a finance team and a legal team.

The document said Bluewater’s principals intended to invest in BTC through a standalone Bahamian entity that would have been capitalized and controlled by Bluewater’s principals. It said Bluewater is an entity controlled by John Gregg.

DEFENDING THE DEAL

Today, Bluewater of course is a dead deal, but what the Christie administration had proposed continues to come up in the current privatization debate.

The Christie administration had agreed to sell a 49 percent stake in the national telecommunications provider for $260 million shortly before the May 2007 general election.

However, after the Free National Movement was returned to power, Ingraham vowed to review the deal, claiming that Christie and the former Cabinet were planning to sell BTC "on credit" and that Bluewater would enjoy too lengthy an exclusivity period as a monopoly in an industry that his administration was keen on liberalizing.

According to documents previously obtained by The Nassau Guardian, Bluewater had agreed to pay $220 million for BTC in cash at closing, $25 million at the end of the fifth year following closing and $15 million at the end of the sixth year.

Under the deal, Bluewater would have been granted mobile and landline licenses with five and six-year exclusive periods, respectively.

Speaking at a press conference at PLP headquarters on Farrington Road yesterday, Christie again defended the deal.

“By innuendos and suggestions he (Ingraham) started off immediately after he became prime minister to suggest that there was something crooked about our involvement in Bluewater,” Christie said.

“The Progressive Liberal Party structured an approach to privatization that relied on the integrity and leadership of the financial secretary (at the time) Mrs. Ruth Millar.

“To ensure that we were on safe grounds we placed the leaders of the management union of BTC and the workers, BCPOU (Bahamas Communications and Public Officers Union), as full members of the negotiating team.

“That team, including the union leaders, would come into Cabinet and brief Cabinet. We took a transparent and accountable approach to it.”

Referring to the prime minister, Christie said, “…If he really wants to look for something, tell the Bahamian people whether or not there are deals in this BTC sale to Cable and Wireless.

“That’s where he should be looking at. The Progressive Liberal Party lost the elections. We can explain the positions we took.”

3/21/2011

thenassauguardian

Bahamas Blog International

The Bluewater story will be told, and it’s a wonderful story for the people of The Bahamas to know and to have

PM responds to Bluewater threat
By CANDIA DAMES
Guardian News Editor
candia@nasguard.com



Prime Minister Hubert Ingraham last night responded to a threat recently issued by Bluewater Ventures Limited, saying he will not be intimidated by the “shell company” and promising to tell the whole story of the Christie administration's plan to sell 49 percent of the Bahamas Telecommunications Company (BTC).

Bluewater recently alleged that the Government of The Bahamas has been making defamatory comments against it and the company threatened to take legal action against the Ingraham administration.

Bluewater has asked the government’s attorney to advise no later than today whether the government intends to issue a public statement repudiating the alleged defamatory statements.

But the prime minister made it clear last night that no such step will be taken.

“They seek to intimidate,” said Ingraham, while wrapping up debate on the government’s mid-year budget statement. “Well, you know you can’t intimidate me in my private life. I wouldn’t talk about the Government of The Bahamas. And so, the Bluewater story will be told, notwithstanding any threats by them.

“The Bluewater story will be told and it’s a wonderful story for the people of The Bahamas to know and to have.”

Ingraham noted that the letter Bluewater’s attorney sent to the government’s lawyer last week never indicated what were the alleged defamatory statements.

Ingraham is expected to address the Bluewater issue during the upcoming debate in the House of Assembly on the BTC privatization.

The prime minister also touched on Baha Mar, a project introduced under the Christie administration that changed substantially under the Ingraham administration. Ground was broken last week on the Cable Beach development and Opposition Leader Perry Christie hit out at the government for not acknowledging at the event the PLP’s role in bringing the project about.

But Ingraham said last night, “Baha Mar is going ahead because the Chinese government is providing the money. They (the PLP) never wanted any business dealing with the Chinese government.

“They recognized Taiwan. In fact, that’s how the leader of the opposition got back in the PLP. The PLP made a deal with the Taiwanese government to recognize them and not the People’s Republic of China.

“Ervin Knowles, who was the minister, got fired, and Christie got hired. Ervin Knowles was appointed ambassador to Taiwan.

“The only reason why we have [ties] with the People’s Republic of China today is because the FNM did that and the Chinese regard us as an old friend and they are supporting us in the Baha Mar project.

“And there was no possibility of Baha Mar being able to get a loan with the Chinese unless The Bahamas government said ‘yes’, please do it.’”

Ingraham said the Free National Movement is delighted at the opportunity to be in government.

But he said, “We are concerned about the extent to which outright lies are told to the public, shamelessly so.”

Ingraham said what the FNM government has done is “unmatchable by them”.

“The reality is, Mr. Speaker, that we on this side of the House are pleased that the people of The Bahamas have reposed their trust in us and that we are spending their money wisely.

“We are preparing their economy for the future.”

3/4/2011

thenassauguardian

Bahamas Blog International

Prime Minister Perry Christie Says No To Cabinet Shuffle

Christie said he disagreed with the notion that making changes to his Cabinet was a must because it is a sign of good governance

No Cabinet Reshuffle

By Candia Dames

candiadames@hotmail.com

Nassau, The Bahamas

03/05/2004

Saying that he does not want to disrupt major projects underway in various ministries, Prime Minister Perry Christie has shelved plans to make "adjustments" to his Cabinet.

"I have to have a real purpose for changing because the results are important," said Mr. Christie, who was a guest on the Radio Love 97 Programme "Jones and Company" which aired Sunday.

He said he disagreed with the notion that making changes to his Cabinet was a must because it is a sign of good governance.

Rumors regarding the prime minister's planned Cabinet reshuffle have been rife over the past several weeks, with Mr. Christie indicating to the Journal at the beginning of the year that he planned to make changes to his team.

At the time, he said, "The prime minister must always examine his government with a view to making adjustments and most certainly I am looking at making adjustments."

But on the Sunday programme, Mr. Christie revealed a change of heart.

He explained that he did not want to draw attention to a small number of ministers and ministries by making one or two changes.

"So as not to put undue pressure on one or two ministries by making adjustments, I decided to wait for a certain process to complete itself," the prime minister said.

He indicated that he is generally pleased with the job being done by his ministers, pointing to several examples.

"I realized that in tourism, for example, I had a minister in the middle of new marketing programmes that have resulted, that will continue to result in, an improvement of [the industry]," the prime minister said.

He added that if he were to make changes to the portfolio of Works and Utilities Minister Bradley Roberts, it could further delay the New Providence road improvement programme many people are anxious to see start and finish.

Pointing to Labour and Immigration Minister Vincent Peet, Mr. Christie said in considering whether to make adjustments, he realized that, "I had a Minister of Labour who had proven to be acceptable on the part of and had credibility with labour unions."

In addition, he pointed to what he indicated was a fine job being done by Minister of Housing and National Insurance Shane Gibson.

"I had a Minister of Housing who, in 22 months had build 558 houses, [compared to the former government] that built in ten years 780 houses," Mr. Christie said.  "So I had a minister who was functioning efficiently."

In recent weeks, government officials have been pointing to their record on building houses, as an example of what they say is significant progress being made by the administration.

In the case of Transport and Aviation Minister Glenys Hanna Martin, Mr. Christie said it would be difficult to change her right now, given that she is working to meet a crucial international July deadline for the upgrade of port security throughout the country.

He also said that it would be unwise to reassign Youth, Sports and Culture Neville Wisdom who is working on very important youth projects, including the implementation of a National Youth Service.

Mr. Christie said, "I had to take stock of what I call the complex nature of governance and judge what I do by the results I hope to achieve and the results I hope to achieve will be attainable if I delayed what I intended to do."