|Govt begins talks with CWC|
Guardian Business Editor
Published: Sep 19, 2012
High-level negotiations have commenced between the government and executives at Cable and Wireless Communications (CWC), Guardian Business can confirm.
Prime Minister Perry Christie's hand-picked team is now actively working to seize majority control of the country's only mobile services carrier, according to Franklyn Wilson, negotiator and prominent Bahamian businessman.
He further revealed that, thus far, the two parties have been communicating through phone calls and e-mails. Wilson said an in-person conference is expected to occur within then next few weeks - here on Bahamian soil.
"The parties are in communication, so in that sense it has started. Each side is committed to a meaningful process," he told Guardian Business. "We will meet face-to-face in the next few weeks in The Bahamas. These parties have agreed to talk in good faith."
When asked which executives from CWC are likely to attend the meetings, he said "it would be people who are authorized to speak on behalf of the company". That implies that Tony Rice, CEO of CWC, may not be in attendance. The top executive was in Nassau earlier this year to visit the prime minister, coincidentally on the day of an infamous island-wide blackout.
The disclosure by Wilson on negotiations reignites a lingering issue with significant political and economic implications.
In April 2011, the Free National Movement (FNM) approved the 51 percent sale of the Bahamas Telecommunications Company to CWC for $200 million. The new government has remained steadfast in its commitment to taking back this majority control since winning the national election in May.
The mandate has sparked strong opinions and harsh criticisms on both sides.
This summer, Moody's released a damning assessment of the government's campaign, calling the negotiations "erratic" and damaging to foreign investment. The rating agency assigned a double credit negative to the BTC talks, both for the Bahamian economy and CWC.
According to a foreign analyst familiar with the matter, who wished to remain anonymous, CWC and its shareholders have been "very quiet" lately concerning the negotiations.
He anticipates little will be said publicly until the London-based company faces questioning on the issue following its interim report in November.
That said, it is certainly on the minds of international investors.
"They will be drawn into questioning on it. Unless there is a resolution, I don't expect an announcement," the source said yesterday. "The issue has dropped off the radar for the most part."
The analyst told Guardian Business that negotiations are "quite sensitive", and the most likely scenario is a resolution whereby the government and CWC "save face".
"You might have a situation where they don't take majority control, like in a Panama-type situation, where CWC has 49 percent but retains managerial control. I think that is on the table and a way for both parties to save face. There is a compromise to be had here," according to the analyst.
The assessment is similar to what has been suggested by Moody's. The rating agency felt a 'probable scenario" would be CWC giving up an equity interest for continued control.
Losing that equity interest, however, would be a "significant credit negative" for CWC, preventing the company from being able to fully consolidate BTC in its audited accounts.
Former Attorney General Sean McWeeney, attorney Rowena Bethel and former BTC CEO Leon Williams round out the Bahamian negotiating team.
|Last Updated on Wednesday, 19 September 2012 14:04|