KeyTech, the owner of BTC and Logic Communications, has lost millions of dollars in the Caribbean in its attempts to diversify into new business opportunities in the region.

One venture in the Bahamas saw the company invest $1.26 million - and due to not getting an exemption to the Caribbean island's own '60/40 ownership rule', were not granted a licence could get nil return on this investment.

Another in Curaao where KeyTech set up a company called Genespidernet (GSN) lost a total of $2.0 million over two years in net loss and the company has written of a loan for $1.55 million. The parent company is now considering selling the business.

This leaves KeyTech in the red in this sector with a total loss of $4.81 million over two years, the company's annual report reveals.

The company in the Bahamas, called Data and Media Ltd. (BD&M), was set up to provide "a competitive hard copy and on-line directory business" under the trade name the Bahamas Golden Pages.

And KeyTech loaned $1,260,742 to this company and it was "intended that amounts loaned to BD&M be converted into a majority equity ownership position in the enterprise".

However in March 2003, KeyTech was told by the Exchange Control Department of the Central Bank of the Bahamas that the application for a majority ownership in the company had been denied.

"The company (KeyTech) is currently seeking additional Bahamian partners and intends to submit a further application to the Central Bank of the Bahamas for approval of a combination of a loan to BD&M from the company and a reduced foreign ownership position by the company in BD&M."

And KeyTech went on to say in its annual report that the recovery on the loan could be anywhere between "$nil recoverability to a $2.29 million" within a five year period.

But it said after "having reviewed the various future scenarios of participation in BD&M by the company and the probability of each occurring" it sad that it expects to get $1.26 million back - by chance the same amount as was invested.

In Curaao the annual report states that in the year ended March 31, 2001 the company bought 50 percent joint venture interest in GSN, "a company established and licensed to provide telecommunications services to residents of Curaao."

It added that the majority of the joint venture's long-term assets were represented by a license to do business in Curaao and during the years ended March 31, 2002 and 2001 the company loaned GSN funds to support its development and operations.

And it said that 50 percent of this loan was eliminated and 50 percent recorded as a loan "in accordance with the proportionate consolidation method of accounting for joint ventures."

KeyTech revealed that it then increased its ownership of the company to 95 percent on February 28, 2002 by buying 45 percent of the company for $515,812.

It wrote off a loan of $1,551,663 in 2002 financial year and has reduced the anamortised value to GSN's licence by $3,053,538.

Sheila Manderson, Chief Executive Officer of KeyTech said in her report: "During the year we continued to monitor the GSN operations in Curaao very closely and in December concluded that despite improving the quality of service the prospect of providing an adequate return for shareholders with this business in a reasonable time frame was not likely, given the fragmentation in that market. This is reflected in the disappointed net loss for the segment. While continuing to operate and fund GSN we are currently exploring, amongst other options, the sale of this business."