Fran­cis Joseph

The ghost of British West In­dies Air­ways (BWIA) reared its head last week when about a group of 30 mi­nor­i­ty share­hold­ers went to court seek­ing a fair price for their shares. The court ac­tion was tak­en af­ter three years of ne­go­ti­a­tions, ex­change of let­ters and promis­es all fell through. This left the mi­nor­i­ty share­hold­ers with lit­tle or no choice but to seek the court's in­ter­ven­tion to de­ter­mine one is­sue: the price of their shares. The share­hold­ers–who num­ber more than 4,000–want a $7.85 price for a share, while the Gov­ern­ment has pro­posed 20 cents.

The class ac­tion law­suit was filed by Ho­race Reid, a Mor­vant res­i­dent, who owns 305,14 0 BWIA shares. Not sat­is­fied with the re­sponse of the Gov­ern­ment, Reid in­struct­ed his lawyer, Lynette See­ber­an-Suite, to ap­proach the High Court seek­ing a fair price for the shares. Af­ter 66 years, BWIA was closed down by the Patrick Man­ning Gov­ern­ment in 2006 and re­placed with Caribbean Air­lines Ltd (CAL).

RIGHT: Mar­i­ano Browne

Pri­vate­ly-owned BWIA was es­tab­lished on No­vem­ber 27, 1940, with dai­ly ser­vices be­tween Trinidad and Bar­ba­dos. In 1947, BWIA was tak­en over by British South­ern Amer­i­can Air­ways, but the name BWIA was re­tained for op­er­at­ing the routes among the Caribbean is­lands. In 1980, af­ter a merg­er with T&T Air Ser­vices, BWIA be­came the na­tion­al air­line. In 1994, the air­line was par­tial­ly pri­va­tised. On Feb­ru­ary 22, 1995, the Gov­ern­ment com­plet­ed the pri­vati­sa­tion of BWIA by turn­ing over ma­jor­i­ty con­trol of the com­mon stock and man­age­ment of the air­line to a pri­vate group of Unit­ed States and Caribbean in­vestors.

By ear­ly 2000, BWIA had changed its liv­ery to a new colour­ful Caribbean green/blue with its fa­mous steel­pan trade­mark, the na­tion­al in­stru­ment of T&T. BWIA's fleet had been up­grad­ed and the air­line spread its wings. BWIA was al­so plagued by loss­es and had a his­to­ry con­tin­u­ous in­jec­tions of funds from the State. On De­cem­ber 4, 2000, the Gov­ern­ment par­tial­ly di­vest­ed BWIA, tak­ing the air­line pub­lic by way of an ini­tial pub­lic of­fer­ing (IPO), and in do­ing so, trans­ferred con­trol­ling in­ter­est to the gen­er­al pub­lic com­pris­ing in­di­vid­u­als and in­sti­tu­tions. Twelve mil­lion shares were is­sued at a price of $7.85. BWIA was list­ed on the T&T Stock Ex­change (TTSE) on Feb­ru­ary 6, 2001, at the is­sue price of $7.85. At the date of list­ing, BWIA's is­sued share cap­i­tal was 46,824,656 shares, of which 15 per cent (7,279,906) was tak­en up by the pub­lic in the IPO.

Rights is­sue

On June 28, 2004, BWIA of­fered for sub­scrip­tion, 1,283,408,712 new or­di­nary shares by way of a rights is­sue of 27 new shares for every one or­di­nary share then held, at an is­sue price of 20 cents per or­di­nary share. The rights is­sue was ex­pect­ed to raise US$40 mil­lion.

As a con­se­quence, the Gov­ern­ment was able to gain al­most to­tal own­er­ship and con­trol of BWIA and sig­nif­i­cant­ly di­lute the share­hold­ers of the mi­nor­i­ty share­hold­ers. The share plum­met­ed from $1.80 to 20 cents (post-rights is­sue). At this stage, the Gov­ern­ment would have been re­quired to no­ti­fy the mi­nor­i­ty share­hold­ers of their right to re­quire the ma­jor­i­ty share­hold­er to ac­quire their shares.

The Gov­ern­ment, ac­cord­ing to sources, failed to do so, which was recog­nised by the T&T Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) in its de­ci­sion to delist BWIA on De­cem­ber 22, 2006. In ear­ly 2005, the Gov­ern­ment, as the ma­jor­i­ty share­hold­er, ap­point­ed a task force to eval­u­ate pos­si­ble op­tions and make rec­om­men­da­tions for the com­pa­ny. The task force made three rec­om­men­da­tions:

�2 Com­plete clo­sure of BWIA with no re­place­ment by a state-owned air trans­port com­pa­ny.

�2 Es­tab­lish­ment of a new air­line, which would have the abil­i­ty to com­pete, sur­vive and even thrive in to­day's glob­al air trans­porta­tion en­vi­ron­ment.

�2 Re­struc­ture ex­ist­ing BWIA in­to a new com­pa­ny mod­el.

Demise of an air­line

The task force re­port fur­ther con­clud­ed that even though the first two op­tions were ex­treme­ly vi­able, it nev­er­the­less elect­ed to rec­om­mend op­tion three, which the Gov­ern­ment ac­cept­ed. In Oc­to­ber 2005, a new board of di­rec­tors was ap­point­ed. This board was giv­en a man­date to re­struc­ture the com­pa­ny and an un­der­tak­ing was giv­en by the Gov­ern­ment that it would make an eq­ui­ty in­jec­tion of US$250 mil­lion con­di­tion­al up­on the achieve­ment of cer­tain per­for­mance tar­gets.

LEFT: Chris­tine Sa­hadeo

De-list­ing of BWIA shares

On No­vem­ber 15, 2005, BWIA re­quest­ed the sus­pen­sion of trad­ing in its shares for a pe­ri­od of three months in or­der to halt any spec­u­la­tive trad­ing pend­ing the re­struc­tur­ing of the com­pa­ny. On No­vem­ber 16, 2005, TTSE ad­vised the SEC that trad­ing in BWIA's shares had been sus­pend­ed with im­me­di­ate ef­fect for a pe­ri­od of three months. In De­cem­ber 2005, BWIA sub­mit­ted pro­pos­als for new col­lec­tive agree­ments to the unions rep­re­sent­ing the work­ers in four bar­gain­ing units in T&T. On Feb­ru­ary 9, 2006, BWIA re­quest­ed an ex­ten­sion of trad­ing in its shares for a fur­ther three months. It in­di­cat­ed that the board of di­rec­tors had un­der­tak­en the in­depth analy­sis of the com­pa­ny to in­form the re­struc­tur­ing process, and that the com­pa­ny was in the process of prepar­ing a busi­ness plan, and a plan of re­struc­tur­ing.

By let­ter dat­ed June 20, 2006, TTSE wrote to the SEC list­ing four grounds up­on which it was seek­ing to re­ly with re­spect to its ap­pli­ca­tion to have BWIA de-list­ed:

�2 Un­sat­is­fac­to­ry fi­nan­cial con­di­tion or op­er­at­ing re­sults;

�2 In­abil­i­ty to meet cur­rent debt oblig­a­tions or ad­e­quate­ly fi­nance op­er­a­tions;

�2 Fail­ure to make time­ly ad­e­quate and ac­cu­rate dis­clo­sures of in­for­ma­tion to its share­hold­ers and the in­vest­ing pub­lic;

�2 An ef­fec­tive and fair mar­ket can­not be made in the se­cu­ri­ty.

Fall of BWIA

On Sep­tem­ber 8, 2006, BWIA an­nounced its demise af­ter failed ne­go­ti­a­tions with the unions. Then chief ex­ec­u­tive of­fi­cer, Pe­ter Davies, who joined BWIA in March 2006, said CAL would re­place the air­line af­ter 66 years in the sky. On De­cem­ber 28, 2006, BWIA held its an­nu­al gen­er­al meet­ing where share­hold­ers were told that the air­line was in­sol­vent and would be closed down, and that the new air­line would be launched in Jan­u­ary 2007. An ap­peal was made to the chair­man, Arthur Lok Jack, as to what would hap­pen to the mi­nor­i­ty share­hold­ers. He said it was the Gov­ern­ment who would have to deal with the mi­nor­i­ty share­hold­ers' in­ter­ests.

On Jan­u­ary 4, 2007, then Min­is­ter in the Min­istry of Fi­nance, Chris­tine Sa­hadeo, said in a news­pa­per ar­ti­cle, that with­in two weeks, the Gov­ern­ment would have had an an­swer for the share­hold­ers. Ho­race Reid, in his af­fi­davit filed in the case, said by March 2007, he de­cid­ed to start lob­by­ing on be­half of the mi­nor­i­ty share­hold­ers. A let­ter was despatched to Sa­hadeo and copied to Prime Min­is­ter Patrick Man­ning, and oth­er min­is­ters. Reid said he got a re­sponse from Jer­ry Hospedales, head of the Di­vest­ment Sec­re­tari­at Di­vi­sion, Min­istry of Fi­nance, ac­knowl­edg­ing re­ceipt of the let­ter and that Reid's con­cerns were ad­dressed. Reid said his ju­bi­la­tion was short-lived when he re­ceived an­oth­er let­ter dat­ed April 24, 2007, say­ing it was an er­ror and that the pro­pos­als were still un­der con­sid­er­a­tion.

Reid said that fol­low­ing the 2007 gen­er­al elec­tion, which the PNM won 26-15, he re­ceived a re­sponse from Mar­i­ano Browne, then Min­is­ter in the Min­istry of Fi­nance, stat­ing that the Gov­ern­ment had agreed on a pol­i­cy frame­work to treat with the mi­nor­i­ty share­hold­ers and that the tech­ni­cal work for im­ple­ment­ing the pol­i­cy frame­work was al­most com­plete. A se­ries of let­ters was ex­changed be­tween Reid and Browne. Reid said he be­came con­fused when the SEC ad­vised the Gov­ern­ment of an "al­ter­na­tive route." The Gov­ern­ment then ad­vised that the of­fer of 20 cents per share was con­sid­ered an ex-gra­tia pay­ment. On June 1, 2009, the BWIA board, act­ing on the in­struc­tions of the 97 per cent share­hold­er, the Gov­ern­ment, fi­nal­ly made an of­fer to pur­chase all the out­stand­ing shares of the mi­nor­i­ty share­hold­ers at a price of 20 cents a share. This did not go down too well with the mi­nor­i­ty share­hold­ers. Reid con­tact­ed Pe­ter Per­me­ll, mi­nor­i­ty share­hold­er rights ad­vo­cate, and they be­gan their re­sponse. The mi­nor­i­ty share­hold­ers were not hap­py with the of­fer.

On Ju­ly 29, 2009, Browne met with sev­er­al mi­nor­i­ty share­hold­ers to dis­cuss the mat­ter in an ef­fort to re­solve the im­passe, but they left dis­ap­point­ed. The share­hold­ers met on Au­gust 3, 2009, at the Cas­ca­dia Ho­tel. Fol­low­ing the meet­ing, at­tor­ney See­baran-Suite was re­tained to rep­re­sent them. See­baran-Suite, by let­ter dat­ed Au­gust 13, 2009, ad­vised the Gov­ern­ment that more than 90 days had elapsed since mem­bers of the group for­mal­ly re­quest­ed that the fair val­ue of the shares be fixed by the court. The let­ter fur­ther ad­vised the min­is­ter that he had failed and/or re­fused to make the req­ui­site ap­pli­ca­tion to the court, in fla­grant dis­re­gard of the le­git­i­mate re­quests and his re­spon­si­bil­i­ty in ac­cor­dance with the law. As part of the case pre­sent­ed to the court, Hansard records have been at­tached, show­ing that the mat­ter was raised in Par­lia­ment and there were full sub­mis­sions from Min­is­ter of Works and Trans­port, Colm Im­bert, and Siparia Mem­ber of Par­lia­ment, Kam­la Per­sad-Bisses­sar. The mat­ter will be called for the first time on June 15.