Investors’ loss


The 738 shareholders in the Almond Beach Village

Resort could be receiving a mere eight cents on every

dollar invested when the dust finally settles.

A source told Barbados TODAY that five major

investors in the hotel were currently holding 80 per cent

of the shares, while the minor shareholders, who included

workers at the St Peter establishment, were holding

20 per cent.

The major shareholders who would have bought shares

initially at the going price of $2 per share are Barbados

Shipping & Trading –– 20.5 million shares, which represent

36 per cent; Roberts Manufacturing Co., Ltd –– 11.3 million

shares, which represent 20 per cent; Sagicor Equity Fund

–– 8.2 million shares, which represent 14 per cent; Neal &

Massey Ltd –– 3.2 million shares, which represent six per

cent; and the National Insurance Scheme –– 2.4 million

shares, which represent four per cent. Giving more details

of the transaction which would see Barbados Tourism

Investment Inc., which is an arm of the Government,

recording a loss of US$20 million before the property is

handed over to Sandals of Jamaica to run, the source said:

“We have a property which is about 30.725 acres and

additional land of 10,360 square feet, with an improved

value of BDS$140 million being sold to BTII for

US$50 million.

“The first concern is, this property is being sold at a

value way below its land tax value. Another issue is the

valuation of the Almond brand which is US$3 million. With

brands and property one would expect an independent

professional valuation. You should have an independent

professional valuer determine if the US$3 million for the

brand is a fair price.”

The source continued: “Almond had a special meeting

of the shareholders to agree to sell the property to BTII.

Now here are the terms: the terms were a deposit of US$25

million. Now you would want to know if BTII has paid the

deposit. One would expect by now that US$25 million would

have been paid in. When we look at the terms, the other

US$28 million was given as a loan to BTII under the following

terms. The agreement was over a three year period at five

per cent interest. The government has acted as guarantor for

only US$5 million. Government has not acted as guarantor

for the full sum.

“The question has to be asked if due diligence was carried

out on BTII. It has to be remembered that Government’s

sovereign currency has been reduced to junk bond status;

therefore one would have expected a higher rate of interest

for a Government entity, probably in the region of ten per

cent plus,” the source added.

The source pointed out that US$20 million of the US$25

million will be used to pay off the Bank of Nova Scotia, while

US$5 million is being used as closing cost of the transaction

related to the sale of the property.

He further pointed out that the other US$28 million

will be used to pay back loans from BS&T, the property

transfer tax, monies owed to the NIS, the Value Added Tax

Department, suppliers and Inland Revenue.

“It is only at that stage that after all of these debts

have been paid off that you get to the shareholders. They

are anticipating, based on what was said at the special

meeting, you would have just enough money to pay each

shareholder about 7.8 cents in the dollar. These shares are

currently traded on the local Stock Exchange at 32 cents.

They anticipate that when this transaction is all finished,

shareholders would only get back 7.8 cents in the dollar.

They will be losing 98.2 cents in the dollar,” the source said.

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