Divestment or diversion?
It took them long enough. I broke the news on December 27: “My sources say Supreme Ventures Limited (SVL) will be named preferred bidder for CTL ... .” Yet it wasn’t until last week that CTL CEO Cedric Stewart made the official announcement and added that the deal is expected to be concluded before April.
For his sake, I hope this isn’t an April Fools’ joke. Previously (Gleaner, November 14, 2015), I’d traced the history of Caymanas Park racetrack relevant to this exercise and warned:
“... How do you think stakeholders will react to a gaming monopoly, sealed by the acquisition of the racetrack, being handed to SVL? Unlike gaming machines that require only a customer and some coins, horse racing can’t operate without a dedicated, skilled network of stakeholders, including trainers, jockeys, grooms and breeders, and won’t get off the ground without its main investor, owners.”
The reality was that the divestment committee, whose membership isn’t widely known although I understand it included a past and present CTL chairman and CEO Cedric, found itself between a rock and something hard. SVL had “strength of cash”, but neither horse-racing expertise nor stakeholders’ support, while CRE had the expertise and stakeholders’ support but no comparable hard cash. The committee, after one member withdrew, went with SVL.
Well, it hasn’t taken long for predicted (g)rumblings to begin. Already, a militant Vin Edwards announced that trainers won’t be supporting this divestment unless there’s a clause in the agreement returning the track to Government should SVL not keep it open for any 60-day period. I expected just this sort of irrational reaction to the perceived pirating of stakeholders’ ‘interest’ in track ownership to evolve.
Such a clause is ridiculous. It’s like selling an apple on condition that it’s used to make pie or returned to the seller. Worse, this would give opponents of any divestment (there are many) the opportunity to undermine divestment by concocting some ‘issue’ of discontent, however de minimis, and using it to ‘lock down’ racing for 60 days. Voilà, we’re back to square one. No sensible private-sector purchaser would countenance such a nonsense provision, and SVL is eminently sensible. But this is only the first shot across the bow. I predict every known device including some newly created is about to be deployed to block this divestment.
CASH ON THE TABLE
Channelling Abka, I ‘obtained’ a copy of a document sent to the finance minister by CRE, the failed bidder. It’s reproduced here;
‘10 reasons why Caymanas track should remain with Jamaican shareholders’:
1. The stated government policy of giving at least a five per cent advantage to local companies wasn’t followed. Why?
2. The stated government policy of 20 per cent participation, where stakeholders and workers are capable, wasn’t followed. Why?
3. Monopoly: Supreme, with a monopoly in gaming (95 per cent); this isn’t in Jamaica’s best interest. Ask Fair Trading.
4. Supreme in 2015 paid over US$7 million to their overseas owners in dividends and fees. How does that help grow Jamaica?
5. CRE’s plan was the best plan, more inclusive of all stakeholders in racing and expanding the economic base of the Portmore community.
6. CRE has a better knowledge and management experience of racing than Supreme. Supreme has failed at four gaming lounges: Portmore, MoBay, May Pen and Market Place. Racing was the most successful in history when CRE investors [directed] it.
7. CRE had more cash on the table for racing than Supreme has on their balance sheet (9/15) for both racing and lottery CRE $700 million vs Supreme $581 million.
8. CRE has made their bid public while Supreme’s bid is kept secret. If it’s a good bid, why hide it?
9. Jamaica has lost several icons to foreign ownership. Let’s not add another. Life of Jamaica, Mutual Life, Sagicor Bank, Caribbean Cement, Desnoes & Geddes, J. Wray & Nephew, Jamaica Flour Mills.
10. Government spent $35 million through the BGLC to promote the SVL Diamond Mile raceday, while Supreme spent only $5 million. The raceday cost the taxpayers $32 million to give Supreme an unfair perception in the eyes of the public and the evaluation team of the impact of Supreme on racing.
Although I think I know what CRE is getting at, it’s incorrect to refer to SVL as a foreign corporation. It has a service provider contract with G-Tech, a foreign corporation, under which payments are made to G-Tech, but SVL is a publicly listed Jamaican company.
Answers, Minister? The Carpenters might say: “They’ve only just begun.”
Peace and love.
- Gordon Robinson is an attorney-at-law. Email feedback to email@example.com.