The US$1.21 billion purchase of a 75 per cent stake in the Barbadian SOL Group by a Canadian-based firm is being hailed by a consumer rights advocate as a welcomed injection of foreign exchange into the beleaguered economy.
It emerged this morning that SOL, which came close to buying the state oil importer, the Barbados National Terminal Company Limited (BNTCL), would initially give up 75 per cent of its operations in a deal with fuel and petroleum products marketer, Parkland Fuel Corporation.
The transaction and related fees and expenses will be financed by Parkland with a fully underwritten financing package, the companies announced in a joint statement.
The deal, which officials are hoping to close at the end of this year, should also see SOL acquiring approximately 9.9 per cent stake in Parkland, it added.
The transaction, the release said, was subject to “customary third-party consents and regulatory approvals, including approvals of the Toronto Stock Exchange”.
“The SOL brands will remain in place, and the SOL business will retain key management and continue to be managed from the Caribbean,” the release said.
The move would mean considerable sums of money for the struggling Barbados economy while at the same time “remove the pressure off those who wanted to buy BNTCL”, consumer rights advocate Malcolm Gibbs-Taitt told Barbados TODAY this afternoon.
“If there is a sale that will bring more monies to Barbados I am for it. I am not against that at all because our country lacks foreign exchange and that may very well assist in that effort,” said Gibbs-Taitt.
At the end of last November, the Fair Trading Commission (FTC) denied an application by the SOL Group to buy BNTCL in light of the terms of the agreement at the time, saying that it would only approve the transaction if certain issues were addressed.
SOL’s competitor, France-based RUBIS, had secured an interim injunction to stop the proposed US$100 million purchase of BNTCL, which was offered for sale by the Freundel Stuart administration in January 2017.
RUBIS had filed an application in the High Court for judicial review of a decision to approve the inclusion of a 15-year moratorium clause.
Since assuming office at the end of May, the Labour Party Government has thrown the sale of the BNTCL and the Hilton Barbados Resort, another state asset, into doubt.
The Parkland/SOL release, however, made no mention of the BNTCL development.
But officials said the Parkland/SOL deal creates the opportunity for Parkland to roll out its private label, loyalty programme and enhanced food offer.
Outlining a “strategic rationale” the company said the deal “adds significant scale to Parkland’s supply advantage and expertise; provides increased exposure to stable earnings across multiple lines of business; provides diversification from the North American market [and] significantly contributes to Parkland’s US dollar cash flows”.
It will also “support” acquisition and expansion opportunities in the Caribbean and the Americas.
While acknowledging that the company was keen on expanding in the Caribbean and other regions, Gibbs-Taitt raised questions as to whether the Caribbean would benefit from the company’s profits.
“The problem with people who own large companies is that their monopoly power allows them to fix prices that don’t necessarily suit consumers. So that is obviously going to be a factor. The other possibility is where the profit of the company will go. Will it remain in the Caribbean or will it head towards Canada? That, to me, is one of the questions that needs to be asked,” said Gibbs-Taitt.
“All I can see as a benefit to Barbados would be the foreign exchange that may be helpful to us, but the profits that the company will get from its business may not necessarily stay in Barbados. That is my concern,” he said, adding that the deal could result in stiffer competition in some aspects of the sector.
Parkland President and Chief Executive Officer Bob Espey said the addition of SOL to its portfolio would extend its global supply reach and enable the company to build its supply advantage to benefit its entire business.
“With its integrated supply chain backed by an extensive distribution network, fortress assets, a premier brand portfolio and an exceptional team, SOL has built a strong market position with unparalleled regional scale. Together, Parkland and SOL create a significant North American and Caribbean growth platform,” he said.
SOL supplies and markets a total of 4.8 billion litres of fuel volume annually across 23 countries in the Caribbean generating some US$215 million in adjustment earnings before taxes, depreciation and amortization in the 12-month period ending July 2018.
SOL’s founder, Sir Kyffin Simpson, said the deal would ensure “an exciting and dynamic future for everyone”.
“With a desire to continue to develop and grow the business through expansion in new areas, I am extremely blessed to bring in our good friends Parkland of Canada to the Caribbean,” he said.
SOL currently has earnings from 526 retail stations in the region, 266 of which are company-owned or leased sites and 260 dealer-owned and operated.
On the retail side, SOL currently operates 197 Shell-branded retail stations and 163 Esso-branded retail stations and 93 SOL stations in the region.
SOL’s infrastructure assets include 32 import terminals, seven pipelines, three marine berths and 10 charter ships.
On the commercial end, SOL represents approximately 1.8 billion litres of annual volume with operations in 21 countries. It supplies gasoline, diesel, fuel oil, LPG and other petroleum products to commercial and industrial customers across a range of sectors.
SOL is also involved in the aviation business in several countries, operating mostly through joint ventures with various third parties.
Explaining how the deal will be funded, the company said in the release “debt financing of approximately CA$1.1 billion underwritten by Canadian Imperial Bank of Commerce and National Bank of Canada as Co-Lead Arrangers and Bookrunners consisting of CA$470 million of senior secured bank debt, a US$250 million (approximately CA$325 million) term loan and a term facility of C$300 million”.
“SOL Limited will provide approximately CA$518 million of equity financing through its investment in Parkland”, it added.
Good thing SOL did not get to buy THE BNTCL or else it would be in the Canadians hand also
Wonders who actually own sol….
Wait he still bout de place?
“The move would mean considerable sums of money for the struggling Barbados economy….”
So this Parkland-SOL deal is pumping a “cool” US$1.2 BILLION (BB$2.4 BILLION) into the economy, and not a paltry $100 million as if the BNTCL was sold to SOL under the DLP. What an oil change!
Meanwhile the BNTCL remains a profitable government asset and sole importer of gasoline and diesel into Barbados. Never should a private entity have monopoly control over the island’s energy supply. A shared arrangement between Rubis and SOL would have been the lesser of two evils. Collusion would have been the main concern.
As Barbados seeks a new gasoline supplier following the announcement of planned closure of the Trinidad-owned Petrotrin refinery, the Parkland deal might be the eventual savior to fill the gap. Negotiations are currently underway to find a replacement supplier. Parkland’s vast reach and economies of scale could lead to lower prices at the pump — a win for all Barbadians.
With world oil prices steadily rising, BHP Billinton and Repsol are likely to commence exploration for offshore petroleum resources. These two companies obtained licenses from the Government of Barbados for three blocks. Thanks to Mia Mottley’s brilliant legal articulation before the Privy Council to secure the expansive oil acreage within Barbados’ Exclusive Economic Zone. Not bad for someone without an LEC, huh!
While some in this forum are unable to differentiate between the forest and the trees, the Guyana economy is booming from their oil find and exploration.
The future looks bright for Barbados as the direct and indirect foreign investment dollars begin to roll in.
The deal makers are finally coming out of the shadows and into the light was this approved by the FTC interesting it’s amazing how all the objectors are no longer objectors they must change they titles hmmmmm 1.2 billion hope this convert to more benefits to the sol employees just saiyng
Hence why we need to urgently make the national tra sition away from fossil fuels. Sol recognized that in a decade based on government’s “stated 2030 RE TARGET of 100%” its current business model should would be reduced by almost 70%. So cash in a a strategic deal before the …. hits the fan. We should have been serious about selling BNTCL and removed the politics from both sides.
Well spotted Noel Jones. That must have been the plan from the outset. What a steel that would have been, and rightly so when you have desperation looming, among other factors.
And with the movement of fx soon to come will make things even more smooth which ever way.
@ All commenters: missing in all of this, is any word of how blessed Barbados is we are indeed to have a (Sir) Kyffin Simpson- to provide an exemplar of how to start with little or nothing…how to build up your business from a start-up Suzuki agency, and to take on the oil giants of the world-and to win! SOL is now a house-hold name all across the Caribbean, and also in many many other countries in the Western Hemisphere.
Sir Kyff: Congrats and Nuff, nuff, respect due!!
Wonder why SOL didn’t do that BEFORE that WASHOUT.
Everybody knows the BOSS MAN political connections if what a former PM said YEARS back is true
Looks as though he is a former too.Wonder too if that extraordinaire Carson C Cadogan with his nauseating racial talk that he regurgitates every other day had any influence.
Tony webster you need to check out how SIr Kyffin started seriously
Of course I am happy for the owners of sol who will come out smiling with that kinda deal and monies, however it’s abit concerning that we’re selling out our businesses to foreign companies..supercentre to massy now sol to.. and soon Caveshepard and Carter’s. Really hoping we could find away to keep what our fathers and forfathers worked so hard to materialize.
How will we know for sure that the 1.2 bill USD will end up in the Barbados economy?
Will all the meetings with stakeholders didn’t the management at SOL ever pull the PM aside and say hold tight?
Well said@Ric.No guarantee at all.This money could end up in a offshore account. So don’t count the man money.
The notion that this sale will result in the injection of foreign exchange into the Barbadian economy is misleading as it lacks the understanding of international financial practices; specifically where such companies are headquartered.
RIC: I think you are correct. But I am still hoping that the money ends up in Barbados. We need it.
@Ric. Since this news story broke yesterday, you DLP operatives have been all over the place.
It is fascinating to watch you guys shift from sabotage to your conspiracy theories and planting doubt. None of you can maintain a consistent position on the matter.
Just face it, Ric, SOL played the DLP on the BNTCL agreement and now entered into a billion-dollar sale with Parkland that will benefit the Barbados economy. Of course, when people write a huge monthly check (cheque) they expect something in return.
What you can do is stop filling up your car at SOL gas stations now or wait until the rebranding with Parkland’s logo in a few years.
If you are looking for Barbados to fail, that failure already took place between 2008 and 2018 under the DLP. Just sit back and watch the island soar to new heights.
Do we still own anything here? #AskingForAFriend
Unfortunately another Baradian Company has been sold abroad. Yes a good injection of foreign currency but it will also flow back the other way.
This is good business. Win, win all around.
Good for Sir Kyf and good for Barbados.
The $1.2B deal is good for Barbados, this is foreign exchange that is much needed to boost the economy. I saw CCC saying in another post that the BNTCL/SOL transactions would have been a better deal. What a fool! Barbados will sen an inflow of new foreign direct investment which will improve our current account balance.
With a change of government investors confidence have risen and we will continue to seen new investments flowing into Barbados regardless to what the DLP naysayers have to say.
Another piece of Barbados goes into foreign hands. There won’t be anything left soon….. 🙁
It funny how people saying Kiffin Simpson’s deal is good for our economy. Sol is a private not public company operating in 26 countries. That money is going to be in a low taxed jurisdiction, definiatley not here. They only benifit for us is if they buy a govment entity and pump the money into the central bank. So time to get the BNTCL deal back on the table.
This is great news for SOL.
A cool $1.21 billion with no austerity conditions attached.
MIA AMOR MOTTLEY and her morons could learn a thing or two from SOL.
Mia got a few pennies from the IMF with all sorts draconian measures in tow. Including robbing 82 year old pensioners of the savings.
We all remember how the Barbados Labour Party and their operatives in the FTC and elsewhere in Barbados went out of their way to sabotage SOL in the run up to the last elections.
This Govt. is a joke Govt.
Man Carl stop being so nuh. My comment had nothing to do with Barbados failing or not, it was aimed at the thought process that 1.2 will end up in the Barbadian economy.
Do you know whether or not it (or how much of it) will end up in the Barbadian economy?
Wouldnt the sale of the Hilton bring in FX too?
Sad to see another local flagship company lost to foreign investors but it is today’s reality and Mr.Simpson must be congratulated for his achievements. As a private entity Sol like Chefette and others has sentimental value to many Bajans…but times are quickly changing.
So What are we going to do if we run out of things to sell?
@Jennifer and Noel Jones: If you understand investment and the bulk fuel business well, then you will know that this Parkland deal is an option to the purchase of the BNTCL. Had Sol gotten it’s hands on the BNTCL there would have been no need to sell 75% of their shares to Parkland. If you all conduct due diligence on Parkland you will see the true value of the 9.9% share Sol has acquire in Parkland while maintaining the 25% stake in the SOL operation.
This is a strategic investment for the SOL group, now to my understanding the group is domiciled in St. Lucia. If that’s the case we have to examine what benefits are there for Barbados. I’m still researching the fullness of this sale arrangement and how it will affect Barbados’ economy.
@Kevin – “Wouldn’t the sale of the Hilton bring in FX too?”
No one was or is against the sale of the Hilton. What we were and are against is the sale of the Hilton at a give away price.
The answer to your question is yes.
@Ric. “Do you know whether or not it (or how much of it) will end up in the Barbadian economy?”
Let’s wait until the z Central Bank report comes out after the sale is finalize.
“Let’s wait until the z Central Bank report comes out after the sale is finalize.” – I am definitely good with that.
Sad state. No we see that rubis objected. Yuh can hide a buy land bit yuh can’t hide and work it
I thought A Barbadian / bajans supposed to own 51% of shares and then any investment from outside BIM own 49% or less . o boy who we selling Bim Water Aut to now ?? Next highest bidder
This is very bad for Barbados but good – Firstly SOL’s head office is in the Cayman Islands, the Company is therefore domiciled there- Therefore no FX will come into Barbados and profits will leave the island in FX. Just like Massy and Emera with the purchase of BS and T and BL&P. One of the major problems is that most of the successful business are foreign owned including the hotels which means most of the profits are expatriated. This has resulted from Liberalization and globalization which has also decimated our off-shore sector. Seems these have been detrimental to Barbados.
First it was BS&T, now SOL. Who is next, Goddard Enterprises?