Based on the NZ$23 million offer made to TCNZ by Digicel for the purchase of their 60 per cent shares in TCI, those Government’s shares sold to TCNZ in 1997 would now be valued at about NZ$6m which would also include infrastructure improvements.
A provision in the Joint Venture Agreement (JVA) between TCNZ and the Government provides for a “Buyback Right”. The Buyback Right provision (clause 13.1) says “the Government shall have the right to purchase from TCNZ Cook Islands on the third anniversary of the date of this agreement or on any third anniversary thereafter 20 per cent of the Shares in TCI”.
The salient conditions of this “Buyback Right” is such right shall, “only be exercisable on one occasion”, “only be exercisable if the Government or a Government Body which is wholly owned and controlled by the Government continues to hold 40 per cent of the Shares in TCI on the date on which notice pursuant to clause 13.1(c) is given” and, “be exercised by the giving of not less than six months prior written notice to TCNZ Cook Islands”.
Finance Secretary (FINSEC) Richard Neves is on record promoting that Government should consider selling 50 per cent of its shares in TCI but on scrutinising the manner and second-hand details in which this concept is being promoted, it appears to me the FINSEC unknowingly is engaging in a strategic move by Digicel to block or prevent Government from ever exercising its “Buyback Right” in the future.
According to my calculations the sixth anniversary for the Buyback Right falls due in 2015 but at least six months’ notice must be given to TCNZ by the Government. On behalf of every Cook Islander may I suggest Government by way of notice, notify TCNZ of its intentions to exercise its “Buyback Right”.