Published On: Thu, May 30th, 2019

UTS takeover biggest privatization deal ever in Dutch Caribbean

Tjarda Tazelaar - dealmaker voor VanEps Kunneman VanDoorneWILLEMSTAD, CURACAO — Cable & Wireless Communications, part of the Liberty Latin America listed on NASDAQ Global Select Market, has acquired all shares in United Telecommunication Services held by the Country of Curaçao. The interest sold by the seller concerns 87.5% of the total number of outstanding shares in UTS. The remaining 12.5% is held by the Country of St. Maarten. It is one of the largest deals within the Caribbean part of the Kingdom in recent years.

Tjarda Tazelaar, deal maker for VanEps Kunneman VanDoorne: “UTS has telecom activities in Curaçao, St. Maarten, St. Martin, Bonaire, St. Barths, St. Eustatius and Saba. For years, the governments of Curaçao and St. Maarten have been actively looking for a strategic partner for UTS. As the Curaçao Minister of Transport, Transport and Spatial Planning recently wrote to the Curaçao Parliament, a substantial investment was required to “bring UTS’s competitiveness to the required level.” For a regionally operating company such as UTS, it was difficult to keep up with technological developments in the field of telecom in a rapidly changing market and to offer competition to the larger internationally operating telecom providers operating on the islands. In view of the current precarious financial situation in which the Curaçao and St. Maarten countries find themselves, it was not possible for them to make the necessary investments in UTS and to safeguard the competitiveness – and thus the continuity of the company. In this sense we can speak of a “win – win – win” situation: the buyer increases its market share in Curaçao and gains access to the telecom market on the other islands, the seller has realized a good sales revenue and is relieved of the need for further investments in the company and UTS can join forces with former competitor Flow under the wings of its new major shareholder.

The transaction was not only one of the largest transactions in recent years in the Dutch Caribbean, but it was also the first real privatization of a government company on Curacao. There was therefore no “script” ready. The many stakeholders on the seller’s side as well as the political aspects that must be taken into account in such a privatization process, made it an interesting but complex sales process. In a privatization process of a company that is active in a regulated market (such as the telecom market on Curacao) you are dealing with a seller who is also a supervisor and legislator. We worked closely with the lawyers of the American firm Baker Botts, with whom we are part of the Lex Mundinet network. This collaboration was very pleasant and was characterized by our joint client as “seamless”. Our specific role was to advise on all legal aspects of the transaction insofar as this concerned the law of the various Dutch Caribbean jurisdictions. Important elements of the due diligence investigation were the telecom concessions granted to UTS in the various jurisdictions in which it operates and the reorganization of the UTS group that started in 2017, as a result of which several hundred workplaces will disappear (a process that is independent of the acquisition state).

In our advice, much attention was also paid to the competition rules that entered into force in Curacao in 2017 and constitutional and administrative law (with regard to the approval process on the part of the selling government and the regulated telecom market). Parts of the target group that the buyer was not interested in were transferred to a foundation set up for that purpose by means of pre-closing restructuring. The most special moment for me in the long takeover process took place a few days before the final drawing date on 25 March 2019, namely the moment when it became clear that the deal was finally concluded. The drawing date had already been put in pencil several times in the agenda, but each time had to be postponed for various reasons, which raised the necessary questions in the press and parliament. At the end of March all the missing pieces finally fell into place and agreement was reached on all outstanding points. Since we had been longing for that moment, it was a special moment to finally be able to enter the date on the transaction documentation. ”

Cable & Wireless Communications advisers: VanEps Kunneman VanDoorne (Tjarda Tazelaar, Vincent Abbing, Aubrich Bakhuis, Nedra Evertsz), Baker Botts LLP (Jonathan Gordon, John Kaercher, Grace Matthews, Carlos Marquez)

Advisors United Telecommunication Services NV: HBN Law (Eric de Vries, Chris van Amersfoort), Carter Ledyard & Milburn LLP

Curaçao advisors: UTS privatization committee (Alberto Romero, Nico Scheper, Sueena Francisco)