Mystery over proposed TV station deal

Mystery surrounds the $80 million sale of WestStar TV, Cayman’s only cable-TV operator, to a US company controlled by global telecommunications expert Robert Taylor.

iNews Cayman has seen the 10-page application to subscribe to shares in the acquiring company, Cayman Taylor Cable Holdings, and a 13-page investment prospectus for the acquisition.

The prospectus, dated February 2012 and titled “Project Island”, describes itself as an “investment summary”, and states Mr Taylor “has a definitive agreement to acquire WestStar Ltd “, naming the $80 million purchase price, “plus another $10 million in a possible earn-out” for a “total consideration of $90 million.”

An “earn out” is an additional price paid for a company, based usually, on future earnings, providing an incentive for management to strive for top performance, ensuring greater income from the sale.

The investment summary, while not naming Cayman Taylor Cable Holdings, describes Mr Taylor as a globally “accomplished entrepreneur and executive leader” in telecommunications and information technology and “currently a Senior Adviser to Duff and Phelps”, an investment advisory firm with strong interest in mergers and acquisitions.

Most recently, the New York-based company has handled bids to purchase Scotland’s Glasgow Rangers Football Club.

The investment summary says the transaction would be financed through “$50 million to $60 million credit facilities, and $20 million to $30 million with equity”, a shareholding in the new company.

WestStar, it says, founded in 1993, also holds a 33% ownership stake in Bermuda Cablevision, Hamilton’s leading cable-TV provider, from which WestStar expects to earn US$4 million in 2012.

The cable company, according to the prospectus, with 140 channels and 12,800 subscribers, 55% of Cayman’s 23,100 residences, expects almost US$20 million in 2011 revenues and US$7.6 million in earnings before interest, taxes, depreciation, and amortisation, a classification intended to measure international earnings regardless of tax jurisdictions and varying capital structures.

While the subscription documents do not specify the total number of shares available in Cayman Taylor Cable Holdings Ltd, but state that “Bob Taylor shall have a controlling interest, indicating the company will go through a “regulatory subsidiary”, resulting in WestStar TV “post-merger”.

Chairman and CEO of WestStar TV, Rodney “Rod” Hansen, however, yesterday denied the company had been sold or was in the process of being sold, calling the story “a fabrication”.

Meanwhile, Dave Archbold, Managing Director of the regulatory overseer, Information and Telecommunications Authority, said the agency had neither approved nor been approached about a possible WestStar sale, which, he said, would have to gain a government go-ahead.

“We have no agreement to sell the company,” Mr Hansen told iNews Cayman yesterday, while acknowledging he was familiar with Mr Taylor.

“I know him and he has expressed interest in the company in the past,” Mr Hansen said, but denied any sale or intention to sell.

“I’m not working on an agreement. There are no documents and no operations. This is a fabrication, absolutely.

“I own the place,” he said, pointing out that any negotiations or agreements would necessarily include him, “and there is nothing. These are the facts of the matter and there is no agreement and I am not aware of any negotiations.”

Mr Archbold would say only that “we have had nothing formal. We have not approved any sale and we have not been approached.“

Locally, attorneys for Soiomon Harris confirmed their connection to Cayman Taylor Cable Holdings, saying “we’re not handling the subscriptions, but we incorporated the company” on behalf of Toledo, Ohio-based Niehaus & Associates attorneys-at-law.

Efforts to contact principal Charles Niehaus by telephone and email proved fruitless, as did attempts to contact Mr Taylor.

Mr Hansen’s final word was “do not call me anymore”.