We Mix Business with Pleasure.

by George Maracheau

The proposed sale of GRENLEC presents Grenada with a watershed opportunity to own and control the essential engine of its economic development. The sale itself engenders considerable social and welfare reactions that were triggered by a pricing policy unfavorable to some sections of our community.

GRENLEC is essentially the only vehicle of our energy use in Grenada and on that sole fact it behooves our economy administrators to be absolutely opposed to its sale to entities outside of Grenada. This is especially true where the interest of the purchaser is condensed in one word—Profits.

Consider the current debate in the United States regarding its ‘partial’  dependency on foreign crude; or the history of the controlling countries over the Suez canal; or the importance the U.S. and NATO places over the Straits of Hormuz in the Middle East?  Like growing your own food — controlling your Electricity development, distribution and policies amount to ownership…and that should not be debatable

Which brings us to the present circumstance in the negotiations to the new owners. We began the negotiations with the weakest possible submission it has been my unfortunate experience to have to witness …”we cannot afford to buy”. That of course is ‘untrue’, a euphemism it would be better to displace with what it really was.

‘Who’? and ‘what’? triggered the proposal to sell a seemingly successful company just at this juncture in the political crossroads of Grenada going into a general election. I doubt it was the study undertaken by Attorney Dr. Lawrence  Joseph which pointed to substantial weaknesses in the monopolistic paradigm that always surrounded GRENLEC.   Was it a case of  … ‘the cat being let out of the bag’ when government ministers admitted to be considering the sale of some of its property buildings?

Whatever the reason for GRENLEC’s indecent hasty decision to sell should not have prompted our Government’s reaction to ‘dive to the floor’ in abject submission of defeat.

When GRENLEC presented its option to sell Grenada’s “Negotiating Authority” should have been responsible enough to get widespread input from the community at large. It should have sought more specific consultation on the following issues:

How does this privately owned vehicle of our power generating resource play into the strategy of our economic development.

b) How can the vehicle be obtained {purchased} by institutions and   private persons within the state of Grenada.

c) What specific role can this vehicle play in the investment portfolio of our financial institutions; in the stability of our social security assets for long term growth.

d) Have we interposed GRENLEC into our model for an Agro-industry sector? How does private ownership  relate to a development phase in a long term model where other source materials will be factored in.

There are many related considerations impacting  our Social Framework that the sale of GRENLEC will have to address. These same considerations have aroused antipathy of a varying nature in other previously ill-conceived sales. Those considerations warrant public debate of a much wider scope than has been allowed.

I turn to some more disturbing aspects of the negotiations.

Who is Dr. Sealy? What were all the roles Dr. Sealy played in the  negotiations?

What precisely were his terms of reference?

Why did our negotiating authority omit the unflattering history of the buyer … {our partners-in-waiting} in presenting the Fait-au-Complii to its audience.

Nothing that I have outlined so far is as alarming as the monetary and fiscal information underwritten in the negotiations. It begins with a statement that the Valuation of GRENLEC’s 61.4% is around $100M, extrapolated to $11.00 per share. I hope those figures are wrong or that I got it wrong. If I’m correct however, then why sell an $11.00 asset for $7.50c !!??

Let me excuse myself from legal action here and state that I am presenting a hypothesis…. I know from all the past four financial statements of a company with near-identical features to GRENLEC ’s that it is ‘Blue Chip’ investment. That company was privately owned and so, not regulated by the SEC. Of course it still had to pay income taxes. It had been designated a ‘development category’ company for a number of years and its share valuation had been reflecting that circumstance.

This company knew that it was soon to be re-categorized and its taxes would be affected enormously. I’m an accountant with that company. I tell the  directors that I know another company doing business in another territory nearby. Its share valuation is about $50.00 per share. If you guys want you could sell your company to those guys. They would pay you four times the present valuation.

The directors laugh at me. “We’re not going to sell this company to a bunch of no-good, low-down crooks after we put our sweat into building it up to this!”

“Well, how about if you’re part of that same company you’re selling your shares to.”

“That won’t work buster. We’ll still be due to pay a whacking heavy tax bill. Where did we get this accountant from? Doesn’t know a lot.” I heard one of the directors say solte voce.

“That way you take a mighty hit.” I was ignoring Mr. Blabbermouth.  “In fact if you sell at a low enough % of the true value of your assets you’ll be entitled to income-tax refunds on the loss.  Just compare the price of your shares today at $xx.00 and what it might be like, of the hypothetical company today, showing a share price of $50.00.”

There was no further discussion of the matter. The company was sold within a week after that.

There is no way in Heaven’s name that is happening here. I am merely suggesting to you that there is grave need for public debate on issues of a grand sale such as this.

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