BWIA takes flight: De-listed from TT Stock Exchange

PART FIVE

By letter dated November 16, 2005, the TT Stock Exchange (TTSE) advised the TT Securities and Exchange Commission that trading in BWIA’s shares had been suspended with immediate effect for a period of three months at the request of the company.

By letter dated February 9, 2006, BWIA requested an extension of the suspension of trading in its shares for a further three months.

It indicated the board had undertaken an in-depth analysis of the company to inform the restructuring process, and BWIA was preparing a business and restructuring plan.

It was unable to indicate a definitive timeframe for the completion of this exercise. The company also indicated it had requested an extension of the suspension of trading on the Barbados Stock Exchange.

By letter dated February 14, 2006, TTSE granted the extension of the suspension for a further three months.

In 2006, TTSE requested the commission to authorise the de-listing of BWIA pursuant to section 45(1) of the Securities Industry Act, 1995.

TTSE indicated that BWIA had requested a further three-month suspension of trading in its shares, but the exchange had decided it could not accede to BWIA’s request.

However, the grounds upon which the TTSE was seeking the de-listing were not stated.

By letter dated June 20, 2006, TTSE wrote to the commission listing the following four grounds for its application to de-list BWIA:

1. Unsatisfactory financial condition or operating results.

2. Inability to meet current debt obligations or adequately finance operations.

3. Failure to make timely adequate and accurate disclosures of information to its shareholders and the investing public.

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

In its written submission with supporting documents, TTSE said as a self-regulatory organisation registered under the Securities Industry Act, it has a duty to act in the best interests of the investing public in accordance with rules established by the organisation for this purpose.

Rule 401 of the Stock Exchange Rules enumerates de-listing criteria to be considered by the TTSE in determining whether to remove a company from its official list.

According to Rule 401, TTSE aims to provide the foremost auction market for securities of well-established companies in which there is a broad public interest and ownership.

In consideration of the stock exchange's request, the commission treated grounds one and two listed above as one ground for the purpose of the stock exchange’s supporting documentation.

A review of BWIA’s year-end consolidated financial statements over the period 2001 to 2005, indicated the company consistently posted a loss each year for the duration of its listing.

The auditor’s report to the members of BWIA for each of the years from 2003-2005, clearly concludes that the company’s current liabilities exceeded its current assets.

For the year ended December 31, 2003, the auditor’s report states inter alia, in paragraph four, the company’s current liabilities exceed its current assets by $448,693,000.

For the year ended December 31, 2004, the auditor’s report states inter alia in paragraph four, the company’s current liabilities exceed its current assets by $695,433,000.

For the year ended December 31, 2005, the auditor’s report states inter alia in paragraph four, the company’s current liabilities exceed its current assets by $468,151,000.

Regarding TTSE's ground three, data supplied by TTSE indicated that aside from the year 2001, BWIA consistently failed to file its half-year and year-end results on time in accordance with the listing agreement. It also failed to file such accounts within extensions of time for filing granted by TTSE.

Regarding ground four above, TTSE submitted an effective and fair market cannot be made in BWIA’s shares in light of the listing requirements issued by the stock exchange.

When BWIA was listed on TTSE on February 6, 2001, it was stated on page 14 of its prospectus that its largest shareholder, the government held 48.55 per cent of its issued share capital as of November 2000.

It proposed then to issue for public subscription 12 million shares which represented 23 per cent of its issued share capital.

After BWIA’s 27-for-one rights issue at $0.20 per share in June 2005, the government held 97.18 per cent of BWIA’s issued shares.

TTSE emphasised that only 2.82 per cent of BWIA’s issued shares are in public hands and is of the view that an effective and fair market cannot be made in the security.

BWIA was provided with TTSE’s submission and its representatives at the hearing said the grounds stated therein were accurate and valid. Accordingly, BWIA did not contest the application.

When BWIA was privatised in 1995, the government reduced its shareholding to 48 per cent and was therefore not the majority shareholder.

The government had no control of the board which was appointed by the private sector at that time. As a result of its IPO in March 2001, further shares were issued to the public at which point the government's shareholding fell with more than 25 per cent of the issued share capital in the hands of the public following that issue.

The rights issue in July 2004 occurred when BWIA became insolvent and desperately needed funding to continue operations.

The government provided US$40 million as additional capital when it took up the unsubscribed shares in the rights issue thereby increasing its shareholding in BWIA to 97.18 per cent.

It was only at that time in 2004 that the government reacquired control of the board of BWIA. The new board was not appointed until October 2005.

After consideration of all the submissions and clarifications, the commission ruled that the TTSE is authorised to de-list the shares of BWIA admitted for quotation by it in accordance with the provisions of Section 45 of the Securities Industry Act, effective December 22, 2006.