Mergers & acquisitions

Mottley: We're ready to sell our shares in Liat

BSJ News Desk
June 7, 2019

Barbados has confirmed reports that it is willing to negotiate the transfer of most of its shares in Liat (1974) Ltd. to Antigua and Barbuda, thus giving up its role as the largest shareholder in the regional airline.

Prime Minister Mia Mottley told the House of Assembly on Tuesday that the country had moved from being a minor shareholder prior to 2003, with just over eight percent of the company, to the largest individual shareholder today with a stake of just over 49 percent, and at one time in 2013 held a majority stake of just over 52 percent.

In early May the Antigua Observer reported that the Chief of Staff within the Office of the Antigua & Barbuda Prime Minister, Lionel Hurst, said discussions had been held with Sir Richard Branson to enlarge its fleet and add other equipment.

Mr. Hurst said Sir Richard had proposed investing a sum he described as “several million dollars” and would lease jets to fly from Fort Lauderdale to Jamaica, Haiti and down into Antigua and Barbados.

Mr. Hurst said the whole idea was to enlarge LIAT, rather than making it a smaller entity.”This investment, Hurst said, would allow the air carrier to fly to destinations outside of the region, as there were not enough passengers to make LIAT profitable within the Caribbean.

At the end of May the Observer reported that Prime Minister Browne had said his government was making provisions for the expansion of LIAT through the leasing of the old VC Bird terminal building at Antigua’s airport, which should help to reduce its operational costs.

He told the newspaper he believed that “we can revamp LIAT in such a way and to restructure it in such a way, for it to become profitable,” or to reduce its losses significantly.

But Ms. Mottley told Parliament on Tuesday that the Barbados government did not believe Liat could do what it needed to under its current structure. The airline’s continued losses had made it difficult for the airline to keep its head above water, and studies had shown that the company needed significant restructuring in terms of new models for its governance, operations and finances. But while Barbados had been “persuaded” by those studies, some of which predated her government, she said, other shareholders believed there were “better and different ways to secure the viability of the airline, and the Barbados government accepted that “there is no unanimity on this issue.”

So the government accepted that if other shareholders wanted to try different models for making the airline viable they should be given the chance.

She disclosed that Barbados in the last few weeks had paid a further one million dollars to Liat and satisfied its commitments to the Caribbean Development bank in relation to the purchasing of new planes.

As a result, negotiations should start in the next few weeks. Barbados, she said, would continue to play what she termed “a vital role in Liat” as a minimum shareholder to help ensure that as many of the airline’s routes as possible are profitable and therefore not creating financial burden on the airline. Corporation, Dodridge Miller, said the MoU would help to build capacity in an area of care-giving that was critical to the well being of our citizens as they transition through their senior years.

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Caribbean Biz