Saturday, April 20, 2024

Bid to avoid showdown


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Efforts are underway to stop a shareholders’ meeting on the sale of Hilton Barbados to avoid a showdown between Needham’s Point Holdings Ltd (NPHL), the hotel’s owners, and a shareholder, the National Insurance Board (NIB).

This follows the NPHL’s notice of such a meeting to pass a resolution for the sale of the iconic hotel for US$80 million on Whit Monday bank holiday, May 21.

The notice from NPHL corporate secretary Henderson Williams is dated April 30. This complies with the Companies Act (Section 109) which stipulates that “[notice of] a meeting of shareholders must be sent not less than 21 days, nor more than 50 days, before the meeting (a) to each shareholder entitled to vote at the meeting”.

By law, the resort should not be sold without a shareholder resolution giving NPHL permission to do so. The NIB and the Caribbean Development Bank are the two minority shareholders, while Government owns more than 90 per cent of NPHL’s shares.

This means the minority shareholders cannot stop the sale. However, they can file an injunction to delay the process if they feel strongly against it going through.

The primary concern of the NIB regarding the Hilton deal has been the sale price. The NIB saw it as an affront for NPHL to sell the resort at nearly US$50 million less than its book value. Its board paper from last November declared that to sell the resort at a “fire sale” price was wrong as it was a performing asset. Also, it feared that if the resort was sold so cheaply, it could result in the NIB not being paid its equity investment.

When Minister of Finance Chris Sinckler announced in his May 30, 2017 Budget that the Hilton would be sold for US$100 million, the most up-to-date valuation of the resort – done more than two years earlier – was US$126.4 million. But it was worth more than that, as the resort had refurbished its rooms in 2017 for BDS$11.5 million.

Subsequently, a Ministry of Tourism and International Transport letter dated December 15, 2017, addressed to Williams, chief executive officer of both NPHL’s and Needham’s Point Development Inc., reminded that a business valuation was needed for the resort.

The letter said the valuation must take into account a combination of factors, including the value of the resort under normal business conditions, the company’s operating profitability using the Earnings Before Interest Tax Depreciation and Amortization metric, and projected future earnings.

When contacted, NIB chairman Dr Justin Robinson was optimistic that the meeting would not take place, as efforts were in train to abort it. He did not elaborate.

However, he indicated that if a meeting were to be held, the NIB would decide its position at its investment committee meeting on Wednesday. (SP)


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