The minority shareholders of Cable & Wireless (Barbados) Ltd were deprived of the right to choose, says their lawyer, Garth Patterson QC, and that fact put them on solid legal ground.
Several of them met at the Barbados Public Workers’ Cooperative Credit Union Limited yesterday evening with Patterson, and based on the number who committed afterwards, it appears that a class action suit may be imminent.
They are contending that they have been “forced” to sell their shares to Cable & Wireless (Barbados) by way of a buy-back, which clears the way for Cable & Wireless West Indies Ltd to take control of 100 per cent ownership of C&W Barbados.
One of the main contentions, according to Patterson, was that the action of the board and the majority shareholder were “unfairly” prejudicial to the minority group. He said the Companies Act provided recourse to the minority shareholders in those circumstances.
“Instead of being presented with an offer for the acquisition of those shares, they were presented with an amalgamation transaction, which essentially deprived shareholders of the freedom of choice, the right to choose whether to tender their shares to the offer. In fact, they were never even notified that there was an offer,” he explained.
The senior lawyer contended the board received an offer to acquire the shares late last year and the offer was never communicated to the shareholders. Instead, he said the board met with Cable & Wireless West Indies, renegotiated the arrangement, and presented it to shareholders as a proposal for amalgamation.
“The legal consequences for the two courses of action are significantly different. In a takeover transaction, the stakeholders have the right to say yes to the offer, or say no to the offer. In an amalgamation transaction they have no option. In reality, they had none because the Cable & Wireless majority shareholder, who was voting among them, had sufficient number of shares to carry the resolution, so it was a foregone conclusion. It was basically illusion of choice,” he said.
Former top C&W executive and minority shareholder Ricky Went said he strongly believed the minority shareholders had to fight this case in order to prevent a precedent being set.
“It would mean that any company would have a right to do a similar thing, and then put its minority shareholders out to pasture. We cannot afford this. Not for our children, we can’t afford it for our country. What it says, essentially, is all the gains that we would’ve made to enfranchise Barbadians would be undermined,” Went said, adding that there was no “joy” in taking this stand.
He added: “We’ve been able to make the company a lot more efficient, so it’s well poised to be profitable. And on top of that, having merged as FLOW and LIME, the company would’ve previously had to spend a lot of money to compete with FLOW; you don’t have to do that now. And, in addition to that, it means that all those assets that FLOW would’ve had, as well as all those customers . . . . So the company is well positioned to do well,” he said.
Patterson sent a 16-page pre-action protocol letter, dated October 30, to C&W (Barbados) with several demands from the minority group, and gave the company 14 days to respond. (YB)
