The decision by the Government of Antigua & Barbuda to sell 90 per cent of its shareholding in Cedar Valley Golf Club Ltd will go down as a monumental blunder.
As yet, very little detail has been released by the Government of Antigua & Barbuda to allow the general public to make a proper assessment of this transaction. The Honorable Minister Harold Lovell is quoted as saying, “we think it’s something that can stand the test of scrutiny.”
Clearly my view and his are at the opposite ends of the spectrum. I must reveal that I am a sitting member of the Board of Directors of Cedar Valley Golf Club Ltd. I sit on the board representing the interest of the Alridge family, owners of the second largest block of shares in the company.
I propose to make this comment based upon an article appearing in the Thursday, May 22, 2014, edition of The Daily OBSERVER. The article is entitled, “Bau Panel to build 100 room luxury hotel.”
It is worth emphasising that at this time, there is very little of the details surrounding this project and the agreement associated therewith that has been revealed.
The honourable minister has stated, “this agreement will be subject to a further development agreement where all the things that are to be done will be finalised”. The minister goes on to say, “we have a very clear agreement with respect to the investment that is to be made at the Cedar Valley Golf Club”. These two statements are incompatible with each other. There cannot be “a clear agreement” and “a further development agreement where all things that are to be done will be finalised.”
These are the questions that are puzzling to me:
1. To whom has the government sold its shares?
One gets the impression that the sale of the government’s shares is to the entity known as “Bau Panel Systems Ltd.” The minister, in the article, is quoted as saying “the sale to Bau Panel Chairman David Kendrick will reduce the burden on Government”. Clearly, “Bau Panel Systems Ltd” and “Bau Panel Chairman David Kendrick” are not one and the same entity.
2. Cedar Valley Golf Club Ltd is a totally owned Antigua & Barbuda Company, owned by the public (government) and private sectors. On what basis was the decision made to convert it into a foreign owned company?
It has been the national policy of Antigua & Barbuda, that where a foreign entity or person wishes to participate in a joint venture with Antiguans and Barbudans, no more than 49% of the shares of the entity can be controlled by the foreign group or individual. Has this policy been changed? If so, when was the policy changed? Is this arrangement with Cedar Valley an exception?
3. How much money has the Government invested in the Cedar Valley Golf Club?
I am not aware as the honourable minister has stated that “over the last several years, the government has had to be pumping money into the Cedar Valley Golf Course”. I do challenge the minister to publicly reveal the amount of money that the government “has had to be pumping into the Cedar Valley Golf Club.”
Let me just say that the minister has to be misinformed. On the other hand, is the minister aware of the vast sums of money by way of taxes being paid by the company into the treasury on a monthly basis?
4. Is the minister aware that Antigua & Barbuda can boast of the largest facility and programme for the training of young golfers in the OECS and possibly the whole Eastern Caribbean?
The minister ought to be so aware, for the government has a Sports Department which, for years, has been at the forefront of teaching golf in the public schools and to the public in general.
Bau Panel or David Kendricks brings nothing new to the table in this regard. Is the minister aware that Antigua & Barbuda can boast of several students who have obtained university golf scholarships in the USA? All of this has been achieved without the intervention of Bau Panel or David Kendricks.
5. Does the minister really believe that the plan “to expand, redesign and upgrade the golf course, to attract players from all over the globe” is anything other than “old talk” to “mamaguy” the public? More important than that, I would wish to know where in the future are local golfers going to be able to play and at what cost?
There are golf courses and golf courses… all are not the same. The cost of playing a course varies in the same manner as course conditions vary. Experience has shown that it is less expensive to build a golf course from scratch, than to “redesign, upgrade and expand” an existing facility.
The Cedar Valley Golf course design has been praised by none other than Jack Nicklaus, one of the most celebrated golfers and course designer in the world. Why can’t we appreciate that which was locally designed, constructed and maintained by Antigua & Barbuda? Why are we always lured into the belief that it takes a foreigner to make things better?
6. Is the minister aware that for years, the board of directors (all of them) have sought government assistance in the form of a small annual subsidy in order to make improvement at Cedar Valley; then again, according to the minister, “the government has been pumping money into Cedar Valley”. For the record, Cedar Valley Golf Club Ltd never received the subsidy requested.
7. The percentage share to be sold amounts to 70.68 per cent of the total issued shares at a cost of 4 million dollars of United States currency (EC $10,800,000). Is the minister suggesting that the total value of the Cedar Valley entity is less than 6 million dollars of the United States currency? Is the minister aware that the assets of Cedar Valley Golf Club Ltd includes 58 acres of prime undeveloped land and the golf course sits on 102 acres? Is the minister aware of the total value of this asset, 70 per cent of which he has opted to give away for US $4,000,000?
8. We have been told of the grand plans for the future development of Cedar Valley. Why have we not been told of the amount of money to be spent on the development and in what time frame?
I note that the payment for the shares sold by government “will be made in various stages”. Will this be before, during or after the development has been completed? I have asked myself if this “investor” is unable to pay upfront EC $10,800,000 for the shares, how is the development to be financed?
I know that I do not have 10 million dollars but I do know that should I have an agreement with the government to purchase 70 per cent of the shareholding in the company, that I could raise the money to invest and pay for the shares later. I have but two further questions at this time.
9. Why has the minister failed to reveal that recently, shares were purchased in Cedar Valley Golf Club Ltd in the amount of EC $525,000. These shares were sold at EC$8.75 a share. Who in fact purchased these shares?
10. Finally, how is it that in light of the recent sale, the government has agreed to sell its shares at a bit more than EC $6 per share?
My final comment is that the government is the largest shareholder and controls the composition of the board. However, directors must act in the best interest of the company. What is in the best interest of the majority shareholder is not necessarily that which is in the best interest of the company.
This is a sale that needs public ventilation. Something does not look, sound, smell or taste right. I expect to say more on this matter. As a matter of fact, I do have more to say, but at the appropriate time.