US, Canadian companies dumping and dancing with Caribbean electricity shares
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Two (American and Canadian) with interests in six Caribbean electricity companies have taken different approaches to their valuable overseas shares at the beginning of 2011 – one is dumping, the other is dancing.
Four Caribbean electricity companies – each on a separate island – have been shoved into deep uncertainty after a major American shareholder suddenly decided to divest all of its substantial shares in each.
Mirant Corporation – an Atlanta-based company that just recently emerged from a Chapter 11 bankruptcy – on January 11 announced it was divesting its 1,050 megawatts worth of shares in the four Caribbean companies in The Bahamas, Jamaica, Trinidad & Tobago and Curacao.
Three of the companies are in the English-speaking Caribbean Community (Caricom) region, while the fourth is in Dutch-speaking Curacao.
Mirant has controlling 80 percent shares in the Jamaica Public Service Company (JPSC), 55 percent in the Grand Bahama Power Company, 39 percent in the Power Generation Company of Trinidad and Tobago and 25.5 percent in the Curacao Utilities Company.
Mirant bought its JPS shares in 2001 for US$201 million and four years later ( in 2005) its Caribbean businesses contributed US$156 million in "adjusted earnings" before interest, taxes, depreciation and amortization.
However, the bankruptcy and related events have forced Mirant to revisit its overall plans and begin to shed its overload – and its Caribbean electricity businesses were first on the chopping board.
Mirant Chairman and Chief Executive Officer Edward R. Muller said the move to divest the Caribbean shares in the wake of the bankruptcy proceedings was part of "a strategic (company) plan to enhance shareholder value, both through the return of cash to our shareholders and through our continuing US business."
He said the plan also involves "repurchasing of up to 43 million shares of Mirant common stock" and "selling off our international business interests."
The announcement has not only taken the JPSC by surprise, but has already also forced the Jamaica government to backtrack on plans to divest its own 20 percent shareholding in the company.
