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Compulsory buyout rescues BBC

Rescue: BBC stations are to stay on the air after a compulsory buyout of shareholders

A rescue package to save struggling broadcaster Bermuda Broadcasting Company (BBC) will buy out the company’s investors for ten cents a share, The Royal Gazette can reveal.

Mayfair Ltd — like the BBC, controlled by the Perry family — has kept the TV and radio station afloat with loans and last year struck a deal to increase its share capital to issue more than 4.6 million new shares at $2.40 a share.

The move was designed to allow BBC to issue in excess of 4.6 million new shares at the same price in connection with a loan note worth $3.2 million issued to Mayfair.

Now Mayfair has launched a compulsory share buy-up to save it from insolvent liquidation after it last year struck a deal to acquire up to 95 per cent of BBC shares — which gave it legal power to force the sale of remaining shares at “fair value”.

A letter to BBC shareholders, cosigned by BBC chief Rick Richardson and board member Gary Perry, said: “BBC has operated in difficult economic circumstances for many years.

“It has suffered year on year losses for a long period.

“BBC has been kept afloat by loans from Mayfair.

Without these loans, the board of BBC would have been forced to place BBC into insolvent liquidation.”

The letter added: “Early last year, the board was faced with a stark choice — to close down the BBC or allow Mayfair to rescue it.

“Mayfair was not prepared to invest further monies in BBC unconditionally.”

And the letter said: “The board wished to preserve BBC’s legacy and was aware that without the financial support of Mayfair, BBC would go into insolvent liquidation.

“If this occurred, the shareholders of BBC would receive nothing for their shares and Bermuda would lose a valuable asset.”

And it said: “Mayfair has calculated the fair value of BBC shares to be ten cents per share, which, on the basis that BBC is cash flow and balance sheet insolvent, exceeds the book value of BBC.”

The BBC owns the two remaining Bermuda TV stations ZBM and ZFB after rivals VSB ceased TV broadcasting at the end of last summer. BBC also runs two radio stations.

BBC shareholders are also shareholders in another Perry family firm, Devonshire Properties — but the letter assured them that their holdings in that company would be unaffected by the BBC change.

Fernance Perry, who controlled the BBC, holding company Mayfair and was the majority owner of real estate management firm Devonshire Properties, died aged 93 in November last year.

Now sons Gary and Chris have assumed control of the family’s business empire.

Chris Perry said after the Mayfair deal was struck last October that it would safeguard 29 full-time and 13 part-time or casual jobs.

The letter to shareholders thanked the shareholders of BBC, who voted unanimously at a meeting last year to support the rescue deal, for their support — even though it would end their stake in the broadcaster.

It added: “The board of BBC is proud of the status of BBC and is grateful to shareholders for the part they have played in safeguarding BBC for future generations of Bermudians.”