KINGSTON, Jamaica, Thursday January 4, 2018 – Telecoms company Cable and Wireless is facing a lawsuit filed by one of its shareholders who claims its parent company, Cable and Wireless UK, unlawfully transferred money out of Jamaica for its exclusive benefit.
Eric Jason Abrahams, who holds 60 million shares in Cable and Wireless Jamaica (CWJ), is requesting permission to bring what is known as a derivative action in a court in Florida, United States, in the name of and on behalf of CWJ against its parent company, as well as some of CWJ’s past, present and shadow directors. He alleges they acted in breach of their fiduciary duties, for the sole benefit of the parent company.
Abrahams, who is also managing director of Deutsche Bank Securities, wants US$500 million taken out of the local company to be returned to boost the company’s financial position.
According to a statement posted on the Jamaica Stock Exchange on Tuesday, Abrahams’ complaints mainly concern the significant losses sustained by CWJ as a result of the lack of regulation for a protracted period of new entrants into the mobile market in the telecoms industry after liberalization.
“The parent company had extended financial support to CWJ by way of loans which enabled CWJ to weather that stormy period while CWJ fought to ensure that a level playing field in the mobile market was implemented, which then resulted in a reversal of the previous trend and improvement in CWJ’s revenues,” the statement added.
CWJ says it intends to vigorously oppose the application when it comes up for hearing on April 19 this year.
For the financial year ended 2016, CWJ posted profit of $1.165 million over losses of $8.889 million a year earlier. Those results were led by an 83 per cent decline in operating costs and other operating income and expenses.
Liberty Global, which acquired Cable & Wireless Communications in 2016, opened an offer of $1.45 per share to acquire all minority shareholding in the listed local entity. The offer closes on January 31.
The international telecoms firm aims to acquire three billion CWJ shares, through CWC Cala Holding Limited. CWC Cala and affiliate Kelfenora Limited together hold 82 per cent of CWJ, which trades as FLOW Jamaica.