Mixed brew for business
It was definitely not business as usual in Barbados in 2015 which can aptly be described as a year of mixed fortunes. Most companies faced challenges of one kind or another because of continuing sluggishness of the economy. Some struggled and survived while a few did not make it because of the general falloff in demand for goods and services.
On the other hand, there were companies which rose above these challenges, seized opportunities as they came along, and did reasonably well, generating profits for their shareholders, keeping staff employed and contributing to the economy.
Perhaps the most exciting and most talked about business event of the year was the bidding war for the shares of Banks Holdings Limited (BHL), that pitted Latin-American-based beer giant AMBEV against Trinidadian conglomerate ANSA McAL.
In what can be described as a ding-dong battle for the Pine, St Michael beverage company, AMBEV and ANSA kept raising the stake for the shares, which initially were trading at $2.49 each on the Barbados Stock Exchange (BSE) but reportedly had a market value of $4.
In September, AMBEV increased its ownership of BHL to 40.7 per cent ahead of launching the offer to buy the remaining shares at $4 per share in early October. However, that was not to be as ANSA McAl said they wanted the company more and launched a competing tender offer for $5.20 per share.
By then, the battle was heating up and AMBEV upped its offer to $6.20. ANSA responded by raising its offer to $7. By early November, however, the bitter takeover battle for BHL took a new twist when ANSA McAl went to court and was granted a temporary injunction blocking the sale of BHL.
ANSA was given until November 11 to raise objections to the sale of the company. However, the injunction was eventually lifted, resulting in ANSA appealing that decision. Nevertheless, the bidding war was back on with the offers again being raised by both companies.
It was after AMBEV put an offer of $7.10 on the table, and ANSA responded with $7.20, that shareholders decided. In the end, AMBEV came
But let’s go back a few months to what was an equally talked about occurrence – the merger of Cable & Wireless Communications (CWC), which traded here as LIME, and Columbus International Inc., which traded as Flow.
It was in November 2014 that CWC announced its intention to fully acquire Columbus International Inc. The multi-billion dollar deal was not approved in Barbados until March 2015.
While awaiting approval, the telecommunications company embarked on a US$100 million investment in upgrading and expanding its telecoms infrastructure in Barbados. Chief Executive Phil Bentley said he remained confident in the local market.
A month after the Fair Trading Commission (FTC) gave approval of the deal with a number of conditions, which was sharply criticized by some interest groups and individuals but welcomed by others, CWC announced that it had completed its US$1.85 billion acquisition of 100 per cent of the equity of Columbus International Inc.
The group quickly embarked on a rebranding exercise as it sought to meet the conditions outlined by the FTC.
In mid-July, the company announced that the merged entity would be trading under a new and improved Flow brand.
Then came a surprise in November. Liberty Global announced that it would be acquiring Cable & Wireless in a US$5.3 million deal.
Also generating some keen discussion this past year were developments within the international business sector, when the EU Commission placed Barbados on a blacklist of non-cooperative tax jurisdictions.
The EU move was denounced by local and international officials, with some describing it as a bullying tactic, hypocritical and grossly discriminatory.
However, after forthright efforts by those in the sector as well as the Minister of International Business Donville Inniss, some countries removed Barbados from their list.
During the year, the international business sector also formed a number of relationships with other jurisdictions in the form of double taxation agreements (DTAs) and other arrangements.
Throughout the year various groups and individuals raised concerns about the island’s ability to attract investment. Early in the year authorities were also called on to save the dying sugar industry.
In June came the 2015 Financial Statement and Budgetary Proposals delivered by Minister of Finance Chris Sinckler, The private sector was not impressed.
In fact, business leaders, at a post budget discussion sponsored by the Barbados Chamber of Commerce and Industry (BCCI), said the Budget lacked clarity on a number of issues, including the planned reform of state enterprises while failing to outline measures aimed at growing the economy.
The Government also came under fire from the business community for its decision to remove some items from the so-called basket of basic goods exempt from Value Added Tax (VAT).
Also following the Budget, professionals expressed concern over the move for them to acquire a tax clearance certificate in order to be able to practice, saying it could lead to the closure of a number
In the tourism industry, a number of projects got off the ground as industry officials sought to up their game and take steps to protect the island’s bread and
Throughout the year, two initiatives were launched with the aim of breathing life back into the dying town of Speightstown.
The first was put on by the Barbados Association of Tourism Employees (BATE) and involved hosting a Speightstown Fiesta every second Saturday of each month. The second was the Barbados Tourism Product Authority’s (BPTAs) Speightstown Alive event.
But perhaps what stood out most in the sector was the upgrade of over two-dozen hotel properties across the island to the tune of over $9 million; the start of the US$200 million Sam Lord’s Castle redevelopment; and the granting of the tax concessions, at least on alcoholic beverages, for qualifying hotels.
Also leaving a sweet taste in the mouths of the tourism officials was an increase in airlift and cruise calls, which ultimately resulted in a growth of visitor arrivals. For the first three quarters of the year, visitor arrivals were up just over 14 per cent when compared to the first nine months of 2014.
However, hoteliers are still waiting to access concessions on more items, including proteins.
Some members of the industry also received a scare this year when they ran low on natural gas, which was said to be impacting negatively on their operations.
Another corporate entity that captured the attention of residents and sent tongues wagging was insurance giant Sagicor. It occurred after Sagicor Life was downgraded in January by Standard & Poor’s, just weeks after similar action was taken against Barbados.
The company’s rating was lowered from BB+ to BB-. The rating of Sagicor Finance Limited’s US$150 million, 10-year unsecured notes was also lowered to B from BB-.
This prompted the company, which later this year celebrated its 175th anniversary, to announce that it would be moving its headquarters from Barbados to another jurisdiction.
This plan was met with resistance from a number of residents with some of them charging that the decision would be a major blow to the island’s ability to be marketed as an attractive jurisdiction for financial services companies.
The Minister of International Business dismissed that claim, saying there were many companies that “continue to see Barbados as an attractive location for their headquarters based on our tax system”.
A number of other activities dotted the local business landscape, including work related deaths – one involving the electrocution of a man who was working on a roof top in Wildey, St Michael and another in which an earth mover driver and his vehicle plunged several feet from a cliff in St Philip.
Throughout the year Barbados continued its fight to get a level playing field for rums from CARICOM which compete with highly subsidized rums from
It was also an exciting time for the renewable energy industry despite falling oil prices, with the Government and private sector officials continuing their efforts to expand the industry and slash the fuel import bill. The grid capacity limit for power from renewable sources was also increased to 20 megawatts.
Officials in this sector also weighed in on the controversial waste-to-energy Cahill project. They raised strong objections, saying it was not the right fit for the island.
Things were generally quiet within the banking community.
Some commercial bank customers were asked to pay slightly more in bank charges if their account fell below a certain amount.
And, as the commercial banking community remained generally confident about the local economy, some of them, along with credit unions, stepped in to assist students fund their tertiary education.
Some companies, including Arawak Cement Ltd, carried out restructuring. Others, including fast-food chains Chefette and Burger King, expanded their businesses, while others, including Avon Products Inc., pulled the plug on their operations here.
A number of companies could not hold strain any longer and had to let go some staff or place them on less work hours as they sought to cut costs in order to keep their doors open.
There were numerous efforts by the Caribbean Export Development Agency to help more local companies increase exports from Barbados and the rest of the CARIFORUM region.
The Small Business Association (SBA) continued its campaign to get more residents to buy local products, while encouraging micro and small businesses not to give up.
A number of companies and training institutions tapped into the multi-million dollar Competency Based Training Fund (CBTF) as they joined forces to provide training for staff. And more companies got on board with the Adopt-a-KM programme.
The issue of productivity also remained a hot topic in the business community throughout the year.
Taking everything into consideration, 2015 was a mixed year for business.