Bahamas government unaware of utility management company sale talks

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From left, Deputy Prime Minister Philip Brave Davis, PowerSecure Chief Revenue Officer Ronnie Brannen and PowerSecure Executive Vice President of Finance and Administration Eric Dupont. Photo: Torrell Glinton

By K. Quincy Parker
Nassau Guardian Business Editor

NASSAU, Bahamas — The Bahamas government was unaware that PowerSecure, the company with which it was negotiating terms of a management services agreement, was at the same time discussing terms of a potential acquisition, Guardian Business has learned.

It is not clear whether the knowledge that Atlanta-based power giant Southern Company was negotiating to buy PowerSecure International would have made a difference to the administration. Deputy Prime Minister Philip Brave Davis has been silent up to now on the question of what the administration knew and when.

PowerSecure senior vice president of investor relations and corporate communications John Bluth, however, clarified the matter; he spoke with Guardian Business.

“Since PowerSecure is a publicly traded company, the potential acquisition discussions were required to be completely confidential. No one was aware of the potential acquisition until the agreement was announced on Wednesday afternoon,” Bluth said.

Business as usual

Meanwhile, Bluth asserted that as far as Bahamas Power and Light (BPL) is concerned, it is “business as usual”.

Southern Company agreed to purchase PowerSecure for $431 million, almost twice its value. The sale was announced last Wednesday, and immediately questions were raised about what the sale means for the five-year management contract

PowerSecure has signed with the government of The Bahamas to manage BPL, a wholly owned subsidiary of the debt-ridden, inefficiency-plagued Bahamas Electricity Corporation (BEC).

Under the terms of the sale, PowerSecure will itself become a wholly owned subsidiary of Southern Company. Bluth assured Guardian Business that the Bahamian contract will not be affected.

“There will be no impact. It is business as usual for PowerSecure as we work hard to increase reliability and lower the cost of power,” he said.

Questioned on whether the deal was in the works while negotiations with the Bahamas government were ongoing, Bluth said only, “The agreement between PowerSecure and Southern Company was completed this Wednesday.”

Investigations

Even though the $431 million is almost double PowerSecure International’s market value, the sale has raised eyebrows in the market, inciting at least two law firms to launch investigations into whether PowerSecure breached its fiduciary duties to stockholders and whether Southern Company is underpaying for PowerSecure shares.

Levi & Korsinsky – a US firm with offices in New York, New Jersey, Connecticut, California and Washington DC – is investigating the PowerSecure International board of directors in connection with the sale, which would see PowerSecure shareholders receive $18.75 in cash for each share of PowerSecure stock they own.

“The investigation concerns whether the board of PowerSecure breached their fiduciary duties to stockholders by failing to adequately shop the company before agreeing to enter into this transaction, and whether Southern Company is underpaying for PowerSecure shares,” the firm said in a statement issued on Thursday.

Louisiana law firm Kahn Swick & Foti, LLC is also investigating the sale.

“KSF is seeking to determine whether this consideration and the process that led to it are adequate, or whether the consideration undervalues the company,” the firm said.

Republished with permission of the Nassau Guardian

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