Dear Editor,
I believe Mr Ram did not do a comprehensive analysis prior to determining that the shares sold by the government were undervalued (Business Page, April 15). It is a normal trend for minority shares to be sold below their estimated value.
The 20% stake in Guyana Telephone & Telephone (ATN owns the other 80%) was sold to Datang for $30 million with $25 million being paid up front. GT&T accounted for 12% of consolidated revenue and 28% of consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) at ATN in 2011.
It is estimated that ATN’s controlling stake in GT&T is approximately $148 million, or $186 million for the entire company using a 4.4x multiple on 2013E segment EBITDA. So a 20% stake in a perfect setting would be worth approximately $37 million as against $30 million being paid. However, a minority stake would normally go for a lower multiple.
The entrance of larger companies into Guyana is exciting, as it can radically change our landscape for further development.
Yours faithfully,
Peter R Ramsaroop
