Wednesday, october 12, 2016
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Insurers: Matthew loss ‘could exceed’ $400m By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
Emmanuel Komolafe
Carriers brace for ‘thousands’ of claims
Bahamian insurers yesterday estimated that total insured losses from Hurricane Matthew “could exceed $400 million”, with individual underwriters bracing to receive claims volumes that reach into the thousands. Emmanuel Komolafe, the Bahamas Insurance Association’s (BIA) chairman, pledged that the sector was “working around the clock” to adjudicate/settle claims and payout See pg b2
Sector ‘working round the clock’ to start payouts Monies expected to begin flowing in 2-3 days Fears many impacted homes did not have cover
Exuma in ‘two month drag’ via Sandals closure Exuma’s economy will suffer a two-month “drag” as a result of Sandals Emerald Bay’s decision to close until December 15 to undergo hurricane repairs. Pedro Rolle, the Exuma Chamber of Commerce president, told Tribune Business yesterday that the island’s largest employer accounts for “a huge portion” of its economic activity. Apart from the hundreds of workers directly employed at Sandals Emerald Bay, Mr Rolle said the resort provides the majority of economic “spin-off” benefits for the island’s entrepreneurs and self-employed, such as car rental companies and taxi drivers. And, while the twomonth closure was “not devastating to the point it will kill the economy”, Mr Rolle said the timing was “very bad” given that Exumians required an income to finance essential Hurricane Matthew repairs. Sandals, in a statement issued yesterday, said the Emerald Bay property -
Courtesy of Sandals Emerald Bay website
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
Exuma’s ‘anchor project’ - would re-open on December 15, given that it “requires more extensive repairs than initial estimates” projected following Hurricane Matthew’s passage. Confirming that the Sandals release, and news of Emerald Bay’s closure, had already begun to circulate widely in Exuma, Mr Rolle said the next two months would be “very slow” economically. “Even though it’s a
‘Dismay at slowness’ of electric restoration By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A prominent businessman yesterday said he was “a little dismayed by the slowness” in restoring New Providence’s electricity supply, and urged Bahamas Power & Light (BPL) to better communicate its progress. Dionisio D’Aguilar, Superwash’s president, told Tribune Business that much frustration would be eased if the monopoly utility provider gave Bahamians a clear idea of its restoration plans. He explained that this would give the public some idea of when their supply would be reconnected in the wake of Hurricane Matthew’s passage, and confidence that the ‘new BEC’ had clear programmes, objectives and timelines in place. “I’m a little dismayed at the slowness of the restoration,” the former Chamber of Commerce president told Tribune Business of BPL’s post-Matthew efforts. “Maybe they are out there, I don’t know. I drive through my neighbourhood and see no poles or wires down. I see very few crews on the road. Driving between 10 [Superwash] locations, I don’t get the feeling there are tonnes of [BPL] people on the road.” Mr D’Aguilar was speaking to Tribune Business as he went “foraging” for diesel for his home generator. Based on BPL’s plan to
Baha Mar receiver: No Matthew delay to remobilisation By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net Baha Mar’s receivers yesterday said there was “nothing at this stage” to indicate that Hurricane Matthew’s passage would delay the $3.5 billion project’s construction remobilisation and completion. Raymond Winder, the Deloitte & Touche (Bahamas) managing partner, indicated to Tribune Business that the storm appeared only to have inflicted minor damage on the Cable Beach-based development as it roared past Nassau as a Category Three hurricane. While unable to give “a definitive answer” as to whether Matthew had impacted moves to complete Baha Mar’s construction, Mr Winder said remobilisation was still “on schedule
Businessman urges BPL to communicate better Says frustration will ease if Bahamians see it has plan
Resort to shut until December 15 for storm repairs Chamber chief: Timing ‘very bad’ post-Matthew Won’t ‘kill’ economy, but ‘huge portion’ of activity
relatively short period of time in terms of the local economy, and most of the people working there are not making a lot of money, they need their salary every week,” Mr Rolle told Tribune Business. “It will definitely have a negative impact, not only for the persons who work there, but all the spin-offs. That’s a huge portion of what the taxi drivers make, and because of Sandals we See pg b2
Winder: Construction finish still ‘on schedule’ ‘Nothing at this stage’ to cause hold-up concerns 200-strong CCA team on-site, aiding assessments as far as I’m concerned”. He added that the resort campus had benefited from its north New Providence coast location, as this had offered protection against Hurricane Matthew’s winds from the south, plus storm surges. See pg b3
Building suppliers ‘overwhelmed’ by post-Matthew rush By NATARIO McKENZIE
Tribune Business Reporter
and NEIL HARTNELL Tribune Business Editor Sandals Emerald Bay
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Building supply merchants yesterday said they were “overwhelmed” by the post-Matthew sales rush, as they warned Bahamians to brace for price increases on key restoration materials. Several companies contacted by Tribune Business yesterday indicated that they were out of shingles, plywood or both. Adam Darville, Pinder Enterprises’ general manager, said there were “literally hundreds of people” in its Prince Charles Drive store, forcing management to halt operations for 20 minutes to
Pinder Enterprises halts for 20 minutes to rest staff Warn of price increases, supply shortages Created by US repair rush in hurricane’s wake give staff time to rest. “Business is pretty robust to say the least,” he told Tribune Business. “We have literally hundreds of people in here. We’re being See pg b4
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• Decisions - Fast • Money - Fast Let Fidelity help you regain control of your finances! FREE Financial Coaching available by appointment. Dionisio D’Aguilar reconnect the greatest number of customers at a time, and his neighbourhood’s relatively sparse population, the businessman estimated it would take seven to 10 days for his power to be restored. “BEC should do a much better job of reporting its restoration efforts,” Mr D’Aguilar told Tribune Business. “They should have a map that’s colourcoded to show where they are going next. “We currently have no idea. We don’t know if they’re progressing. It would be good if they held a See pg b4
FREDERICK STREET • CABLE BEACH • WULFF ROAD MADEIRA PLAZA • FREEPORT • MARSH HARBOUR INDEPENDENCE BUSINESS PARK
PAGE 2 , Wednesday, October 12, 2016
THE TRIBUNE
AML chief: No worry over inventory restock By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
The Atlantis Hotel
Atlantis awaits over 3,000 group visitors By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
The Bahamas’ major resort expects to be fully operational today, and ready to welcome more than 3,000 group guests to Paradise Island this week. Atlantis said it had only sustained “minimal” damage from Hurricane Matthew, with all guests able to return to their rooms on Friday, October 7, following an inspection of the property. “Our dedicated Atlantis staff has been working to get us back to normal operation as quickly as possible. We want our guests to enjoy the full Atlantis experience, and we are thrilled that we will be ready to welcome over 3,000 group attendees to the resort this week,” said Howard Karawan, Atlantis’s president and managing director. “I couldn’t be more proud of the team and the passion they have shown to our property, and the compassion they have shown to our guests over the past week.” Atlantis said that from now until October 31, it will match all donations received, up to $250,000, dollar for dollar, with 100 per cent of the proceeds going to the Bahamas Red Cross. “The outpouring of support from our fans and guests during and after Hurricane Matthew has been overwhelming. While Atlantis was minimally
Warwick pushes back ‘soft opening’ after storm Hotel industry ‘fares relatively well’ in Matthew Andros and Grand Bahama properties hit worst affected, others in the Bahamas and Nassau, Paradise Island, were not as fortunate,” the resort added. Among thse is likely to be Atlantis’s adjacent property, the RIU Paradise Island, which lost a section of its outer wall to Matthew’s winds and rain. The Warwick on Paradise Island, in a notice on its website, warned that due to damage caused by Hurricane Matthew it has been forced to delay its soft opening until a later date. “Reservations may be made as of today from 18 November, 2016, onward with availability updated as soon as confirmed dates are available for repairs,” the Warwick said in a statement on its website. Jermaine Wright, general manager at Comfort Suites on Paradise Island, told Tribune Business: “We incurred no major damage due to the pas-
Insurers: Matthew loss ‘could exceed’ $400m From pg B1 the monies due to stormravaged clients. Confirming that payouts would be made “as soon as possible”, Mr Komolafe said the sector’s existing $400 million estimate for insured losses was an initial figure that was likely to change over the next few days. Insurance industry sources, speaking on condition of anonymity, told Tribune Business that the total insured loss estimate was likely to move upwards, rather than down. However, taking the property and casualty insurance sector’s initial $400 million estimate, and combining this with Prime Minister Perry Christie’s suggestion that Matthew’s impact for the Government is three-four times’ that of Hurricane Joaquin’s $100 million, indicates that the Bahamas has suffered a near-$1 billion blow in terms of damages. This fig-
ure becomes even more realistic when uninsured losses, and economic loss from tourism cancellations etc, is factored in. “The islands impacted by Hurricane Matthew account for a very significant portion of the Bahamas’ population and economic activity,” Mr Komolafe said in statement yesterday. “Hence, while it is still too early to provide a definitive figure that accurately quantifies the cost of the damage caused by Hurricane Matthew, we expect that insured losses could be in excess of $400 million.” In a subsequent interview with Tribune Business, he added: “Of course, that number will change in the days and weeks ahead. We’ll have to see.” Mr Komolafe said the $400 million estimate, which would make Matthew comfortably the largest-ever single loss event for the Bahamian insurance industry, “has a lot to do with the is-
Exuma in ‘two month drag’ via Sandals closure From pg B1 have Delta Airlines and American Airlines.” Mr Rolle said the allinclusive property was thus responsible for generating both the bulk of Exuma’s economic output, both directly and indirectly, and the amount of money circulating throughout the island’s communities. “Without that happening, we’re going to do almost to a drag for the next two
months,” he explained. “It’s going to be a very slow time in Exuma for that period. “The spin-offs from Sandals being open, and the flights and visitors coming in, that’s more impactful than Sandals employing persons to work in the actual resort. “This adds up in a big way. We’re going to feel it. The next couple of months are going to be a slow time in Exuma, but it’s not dev-
sage of Hurricane Matthew. We have returned to normal hotel operational mode and have launched post-hurricane clean-up and restoration activities. “We are up and running and open to accept bookings. We have already begun to receive feedback from guests that stayed with us for the duration of the storm. They have complimented the staff for an incredible job of providing outstanding service during a trying period.” On Freeport, the Grand Lucayan reported that it remains closed until a complete assessment of the property is done. Also closed are Memories and Vuva Club Fortuna, while Castaways remains open despite suffering some roof damage. But UNEXSO, which offers scuba diving and interactive dolphin activities to visitors, reported minimal damage and resumed operations on Monday. The Bahamas Hotel and Tourism Association (BHTA), in a statement issued yesterdau, said “most of the Bahamas is open for business, and we are already beginning to see visitors return to enjoy the beauty and hospitality which the Bahamas offers”. “Overall the Bahamas fared relatively well, with the exception of Grand Bahama and Andros, where the impact of Hurricane Matthew was felt the most,” said Stuart Bowe,
BHTA president. “The Bahamas Hotel and Tourism Association continues to liaise with the Ministry of Tourism and partner organisations to gather and distribute information key to recovery efforts, including but not limited to protocol for providing relief supplies to affected areas in a manner which would meet requirements for relief of customs duty, VAT and processing fees. “We are committed to doing our part to aid in the recovery efforts of our industry partners in Grand Bahama and Andros, and look forward to the date in time when they are open and 100 percent operational once again, welcoming guests to their establishments.” The BHTA said it was assisting the Government and Ministry of Tourism with the collection of data from hotel properties in order to determine the status of the Bahamas’ tourism product. It added that reports to-date show that most properties suffered relatively minor damage, with the exception of resorts in Grand Bahama and Andros. New Providence-based properties reported some damage to roof structures; more significant damage to landscaping and, in certain cases, issues with water intrusion. Some marinas, though, were badly damaged.
AML Foods chief executive said yesterday there were no concerns over the restocking of its stores’ food supplies following Hurricane Matthew, telling Tribune Business they had only suffered “minor damages here and there”. Gavin Watchorn told Tribune Business: “With regards to our stores, we managed very well. We have had some minor damages here and there, but nothing significant. “Our Old Fort Bay store got beat up pretty badly on the outside but nothing that is significant. I think Freeport suffered more than Nassau but our stores were practically untouched. As of this point, all of our operations our open with the exception of Dominos Port Lucaya. The Marketplace itself looked like it got some damage.” Mr Watchorn added: “Our stocks are pretty good, although our people have been in Sunday and Monday placing orders for replenishment. We had stock ready to ship so our stores are being replenished and we are not concerned about replenishments.” Mr Watchorn said the company has been closing its stores Gavin Watchorn earlier than normal to allow its staff to get home safely. “We want to make sure our staff get home safely with so many street lights out. I know that we are closing an hour or two earlier because we want to make sure our staff get home safe,” he explained. He added that having visited Freeport and seen the need for portable generators, battery-operated fans and radios, the company was hoping to ship some of those items into Grand Bahama this week. “We are trying to get some water and ice into each market for our staff. A lot of them don’t have electricity and we’re working on getting them water and ice now that we are kind of past the initial assessment of our stores and dealing with the chaos of trying to get fuel for our generators,” Mr Watchorn said. “Richard Jones, the head our facilities, did an amazing job of keeping our stores running and getting fuel. We called in some favours, and we had one or two periods where we had to shut down because we didn’t have enough fuel, but for the most part our stores have been running with fuel and it hasn’t been a problem.” Mr Watchorn said AML Foods was now focusing on how it could help its staff. “We have had reports that some of them have major damages to their homes, and we are looking at how we can help them, by getting them a hot meal, water and ice,”he added. “We are working on getting some containers of water and ice into Freeport. That’s our focus right now. We have repair work to do but we will focus on that later this week. Right now it’s just getting the products in and taking care of our staff.”
lands impacted”. “A lot of economic activity is generated in those islands, New Providence and Grand Bahama, and we have a lot of concentration of insurance risk on those islands,” he said. “That explains why we expect a significant amount of insured losses as a result of Hurricane Matthew.” Property and casualty underwriters, and insurance broker/agent intermediaries, had been open over the holiday weekend - some since Saturday - to receive and process claims from storm-ravaged clients. “We’re working around the clock to make sure this is done as soon as possible,” Mr Komolafe told Tribune Business. “It’s our priority, our objective, to make sure claims are adjudicated and payments made as soon as possible. That’s our focus; to return clients to a state of normalcy regarding their property.” Based on the level of devastation Matthew has left in its wake, Mr Komolafe said individual underwriters - Bahamas First, RoyalStar Assurance, Insurance Com-
pany of the Bahamas (ICB), Summit Insurance, Security & General and NAGICO (Bahamas) - were bracing for “a significant number of claims”. Timothy Ingraham, Summit Insurance Company’s president, told Tribune Business that the carrier had already received hundreds of claims over the holiday weekend, and saw a greater influx yesterday. “We’re already in the hundreds in the first few days, so it would not surprise me if we approached 1,000 claims between all the islands,” Mr Ingraham told Tribune Business. Insurance Management, which places most of its general insurance business with Summit, opened its Freeport office on Friday, just hours after the storm passed over Grand Bahama. The company’s Nassau head office was also open throughout the weekend to receive claims. “Up to Monday morning, we’d seen a couple hundred claims come through the door of both locations combined,” Mr Ingraham said. “We’ve seen them come in today, the first business
day since it happened, and there’s a lot more coming through the door. “We have our adjusters in the field already, looking at claims, speaking with clients, taking pictures and helping people through the process.” The Summit chief expressed concern, though, that many homeowners, particularly those without mortgage obligations, may have elected to drop catastrophe (hurricane) coverage, thereby exposing them to either significant financial or property loss. “With the economy obviously having been difficult in the last few years, a lot of people who did not need insurance, because they did not have a mortgage, may have opted to go without it,” Mr Ingraham explained to Tribune Business. “It would not surprise me if many of the affected homeowners opted to go without it, or opted for insurance without catastrophe coverage. “It’s difficult to say how many until we get numbers from the Government on how many houses were affected compared to the
number of claims we have received.” Homeowners in this position may find themselves having to fall back on the Government and its National Emergency Management Agency (NEMA) for assistance, thereby becoming a burden on the state. Mr Ingraham said claims payouts to impacted clients were expected “to begin in the next couple of days, if they have not started already; in the next two to three days for sure”. With businesses just opening and starting to assess hurricane damage, Mr Ingraham said Summit and other underwriters would “have a pretty fair idea of where the numbers are going, and what we’re looking at”, by the week’s end. “It’s certainly the most impactful event in recent memory,” he added of Matthew. “I don’t recall an event where Nassau and Freeport were both affected to the extent they were. “Our goal is to get the clients the money they are entitled to as quickly as possible, so they can get their lives and homes back together.”
astating to the point it will kill the economy. It’s only a short period of time, and at least people know and can plan for it.” However, the two-month closure will deprive Sandals employees and others on Exuma of all, or a substantial part, of their incomes at a critical time. The Emerald Bay property’s shuttering includes both the run-up to Christmas and the Thanksgiving season, plus the period when residents will be seeking to repair the damage caused by Matthew’s winds and flooding/storm surges. “It’s happening at a time
when people need their salaries the most,” Mr Rolle conceded. “This is a time when, because of the hurricane, there are all sorts of repairs to be done. People need their incomes.” While Exuma had been spared the worst of Matthew’s wrath, Mr Rolle said repairs were still required to many roofs, and also to mitigate minor flood damage. “It’s happening at a very bad time for the Exuma economy really,” Mr Rolle told Tribune Business. “But we’ll survive.” Jeremy Mutton, Sandals Emerald Bay’s general manager, was said to be in
a meeting when Tribune Business called, and did not return this newspaper’s messages seeking comment before press time. Sandals’ statement said of the closure: “We recognise the inconvenience this presents, but we are committed to delivering the quality Sandals experience our guests expect and deserve. “Guests affected by the closure of Sandals Royal Bahamian and Sandals Emerald Bay have one year to travel to the same resort at no additional cost for the resort stay. “Those wishing to travel to a different Sandals or
Beaches Resort may do so at no additional cost for the resort when travel is completed by December 20, 2016,” it added. “All air penalties and fees will be covered by Sandals for revisions made by October 31, 2016. Blackout dates apply.” The air penalties and fees will be covered by Unique Vacations (UVI), an affiliate of Sandals Resorts. “When we reopen, it will be right,” said Tammy Gonzalez, UVI’s chief executive.
THE TRIBUNE
Wednesday, October 12, 2016 PAGE 3
Fiscal calamity just ‘one disaster away’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
the Bahamas in 2016, and the economy having contracted for two consecutive years prior, the Opposition’s deputy leader warned that Matthew “may push us further into negative growth again”. Mr Turnquest, the east Grand Bahama MP, added that the devastation to Freeport and the island as a whole would weigh heavily on the country’s 2016 economic performance. He added that he had been “led to believe” that major employers and industrial concerns, Polymers International and Bradford Marine, had incurred “significant damage” as a result of the Category Four storm. Mr Turnquest said the key issue for Grand Bahama was the restoration of electricity supply, as this drove both water services and the island’s economy. He added that the private sector’s recovery was vital to providing Bahamians with the jobs and incomes necessary to finance repairs to their homes. Tribune Business reported yesterday that 700 electricity poles, some carrying key distribution lines, were down on Grand Bahama. “I think that people are trying to pick up the pieces,” Mr Turnquest told Tribune Business, “but without electricity not much can happen. “A major concern for most people is the status of their employment, as
areas such as Port Lucaya sustained tremendous damage. The hotels are also assessing where they are and when they will get back on line. These things are further stressing out people.” Mr Turnquest said Grand Bahama would now likely have to endure a recovery period similar to the one it went through following Hurricanes Frances and Jeanne in 2004, two ‘backto-back’ storms that left the island “on its knees”. “Commerce in Grand Bahama has suffered a significant setback,” he added. “It will be a while before we get back into the swing of things and contribute to the economy. “I couldn’t put a number to it at the moment, but it’s been a significant blow to the economy. If we can’t get the hotels up and running quickly that becomes an issue. “Getting the properties back on line, and people back to work, that’s the most important thing here, so they can generate income and rebuild.” Mr Turnquest said his post-Matthew travels on Grand Bahama had revealed that many residents lacked both the incomes and insurance coverage to rebuild, and were “hoping NEMA and the Government come through”.
Sandals rejects ‘ideal’ December re-opening
be implemented within 14 weeks, were described as a “massive feat”, considering the original timeframe for completion was appraised at four months. Sandals Royal Bahamian said it would unveil a newlyrenovated Windsor pool and restored Balmoral pool deck, as well as major upgrades to five of its restaurants to include re-roofing. The Windsor Ballroom will also undergo significant improvements to include updated audio visual equipment and soft furnishings. Other repair work being undertaken extend to the resort’s Red Lane Spa and an overhaul of electrical systems in select areas. Several rooms and suites affected by recent emergency maintenance issues are also being restored.
The Government’s proposed hurricane reconstruction bond shows the Bahamas is “one disaster away from financial disaster”, the Opposition’s finance spokesman said yesterday. K P Turnquest, admitting that he was “concerned” about the Christie administration taking on further debt, argued that its comments about ‘fund raising’ and private sector participation showed the Bahamas had used up all “fiscal headroom” prior to Matthew’s passage. And, echoing Chamber of Commerce chairman, Gowon Bowe, the FNM’s deputy leader queried why the Bahamas had yet to establish its own hurricane insurance fund, financed by annual contributions from the Government’s Budget. Mr Turnquest also called on the Christie administrations to use the funds it had allocated as ‘contingencies’ to numerous Ministries and departments in the 20162017 Budget for hurricane relief, prior to borrowing more monies. Questioning whether it was the Government’s responsibility to act as ‘chief fund raiser’, Mr Turnquest told Tribune Business: “The fact they’re going out to borrow tells us something. “The fact they’re talking about fund raising tells you
KP: Rebuild bond shows ‘no fiscal headroom’ left Urges Govt to use Budget ‘contingencies’ first Storm may push nation ‘further into negative growth’
Peter Turnquest
the [fiscal] headroom that might have been available is not. There is no room. “It appears that we are only one disaster away from financial disaster, and if we don’t get Freeport up and running quickly, that’s going to be a significant issue for this country.” Tribune Business revealed just prior to Matthew’s passage just how little ‘room for manoeuvre’ the Government has, a result of the Bahamas’ everincreasing national debt and worsening fiscal ratios. The Central Bank’s latest quarterly report disclosed that total public sector debt was a mammoth $7.604 billion, a sum equivalent to more than 90 per cent of national economic output (GDP). That figure includes both the guaranteed and nonguaranteed obligations of public enterprises, alongside the direct charge on
By NATARIO McKENZIE
Tribune Business Reporter
nmckenzie@tribunemedia.net
Sandals Royal Bahamian has pushed its opening date back 12 days as a result of damages sustained during Hurricane Matthew, its general manager yesterday saying that while delaying the opening to mid-December would have been “ideal, we have to get people working”. Gary Williams told Tribune Business: “Due to the damages we sustained from
Damage to Royal Bahamian justifies push back But opts for just 12-day setback to October 25 Top manager: ‘We have to get people working’
central government. The latter, and the national debt, as a percentage of GDP, stood at 70.8 per cent and 79.6 per cent. Both exceed the so-called ‘danger threshold’ set by the International Monetary Fund (IMF), in the belief that countries above these ratios could fall into an ever-increasing debt spiral, as they borrow more to meet existing interest payments. Placing his concerns over the reconstruction bond in context, Mr Turnquest said: “Our Government brags about taking home $600 million in VAT, some $200 million more than budgeted, yet the debt has not gone down and they still have cash flow problems. “If you look at the Budget, there’s all kinds of contingency allocations for every department. Why can’t we use that money? To go out and borrow more money, in the absence of alter-
the hurricane, we set back the opening date to October 25. We had a lot of landscape damages. I have ordered $80,000 worth of plants. “The island is just about demolished except for the main building. We had lots of leaks, three-quarters of our rooms were flooded, water came in under the sliding doors, we lost food balconies on the Windsor.” Mr Williams said a team comprised of Bahamian contractors as well as some from Jamaica were on the
natives, is one way to do it.” Mr Turnquest joined Mr Bowe in calling for the Government to establish its own hurricane insurance fund, financed by annual contributions from the Budget. “It’s a lack of planning, a lack of being proactive, and a lack of being disciplined,” he told Tribune Business. “This is the hurricane belt. There’s no reason why we could not have a $10 million fund ready for this situation. We should not be hand to mouth like this. It doesn’t make sense. Put in $1-$2 million per year, and build it up to $10-$20 million.” Mr Turnquest also agreed that the fiscal and economic blow dealt by Hurricane Matthew would likely create the danger of another credit rating downgrade for the Bahamas, something that would drop the nation to ‘junk’ status and cost it its current ‘investment grade’ position. “They’ve [the rating agencies] already been giving us warning signals about spending, and here is a significant blow to the Bahamas that has not been planned for, with not compensating offset in terms of reduced spending in other areas,” he added. “It will be interesting to see how we fund this recovery, and what effect the hurricane has on the GDP numbers.” With just 0.5 per cent GDP growth projected for
Cable Beach property working to get it back in shape. “We have a huge team here now, some help from Jamaica and some local contractors, and we hope to open on October 25,” he said. “It’s not ideal. We have a lot of work to do, and the ideal thing would have been to stay until the middle of December, but we need to get people working and get the business open. What is left we will do while the hotel is open.” Mr Williams said Sandals
MARKET REPORT TUESDAY, 11 OCTOBER 2016
t. 242.323.2330 | f. 242.323.2320 | www.bisxbahamas.com
BISX ALL SHARE INDEX: CLOSE 1,947.33 | CHG -0.06 | %CHG 0.00 | YTD 123.38 | YTD% 6.77 BISX LISTED & TRADED SECURITIES 52WK HI 4.25 17.43 9.09 3.50 4.70 0.18 8.30 8.50 6.10 10.60 15.50 2.72 1.60 5.80 9.00 11.00 8.26 6.90 12.25 11.00
52WK LOW 2.47 17.43 9.09 3.15 1.77 0.12 6.09 7.25 5.50 7.00 13.05 2.25 1.31 5.55 6.00 9.85 6.12 6.21 11.80 10.00
PREFERENCE SHARES 1000.00 1000.00 1000.00 1000.00
1000.00 1000.00 1000.00 1000.00
1.00 106.00 100.00 106.00 105.00 105.00 100.00 10.00 1.01
1.00 105.50 100.00 100.00 105.00 100.00 100.00 10.00 1.01
SECURITY AML Foods Limited APD Limited Bahamas Property Fund Bahamas Waste Bank of Bahamas Benchmark Cable Bahamas CIBC FirstCaribbean Bank Colina Holdings Commonwealth Bank Commonwealth Brewery Consolidated Water BDRs Doctor's Hospital Famguard Fidelity Bank Finco Focol ICD Utilities J. S. Johnson Premier Real Estate
SYMBOL AML APD BPF BWL BOB BBL CAB CIB CHL CBL CBB CWCB DHS FAM FBB FIN FCL ICD JSJ PRE
LAST CLOSE 4.06 15.85 9.09 3.50 1.96 0.12 6.47 8.50 5.83 10.44 14.00 2.25 1.53 5.80 8.78 10.95 8.26 6.61 11.93 10.00
CLOSE 4.06 15.85 9.09 3.50 1.96 0.12 6.47 8.50 5.83 10.44 14.00 2.18 1.53 5.80 8.78 10.95 8.26 6.61 11.93 10.00
CHANGE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.07 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
CAB6 CAB8 CAB9 CAB10 CHLA CBLE CBLJ CBLK CBLL CBLM CBLN FBBA FCLB
1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.00 100.00 100.00 100.00 10.00 1.01
1000.00 1000.00 1000.00 1000.00 1.00 100.00 100.00 100.11 100.00 100.00 100.00 10.00 1.01
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SECURITY Fidelity Bank Note 17 (Series A) + Fidelity Bank Note 18 (Series E) + Fidelity Bank Note 22 (Series B) +
SYMBOL FBB17 FBB18 FBB22
LAST SALE 100.00 100.00 100.00
CLOSE 100.00 100.00 100.00
CHANGE 0.00 0.00 0.00
Bahamas Note 6.95 (2029) BGS: 2014-12-3Y BGS: 2015-1-3Y BGS: 2014-12-5Y BGS: 2015-1-5Y BGS: 2014-12-7Y BGS: 2015-1-7Y BGS: 2014-12-30Y BGS: 2015-1-30Y BGS: 2015-6-3Y BGS: 2015-6-5Y BGS: 2015-6-7Y BGS: 2015-6-30Y
BAH29 BG0103 BG0203 BG0105 BG0205 BG0107 BG0207 BG0130 BG0230 BG0303 BG0305 BG0307 BG0330
115.04 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
115.18 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
0.14 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Cable Bahamas Series 6 Cable Bahamas Series 8 Cable Bahamas Series 9 Cable Bahamas Series 10 Colina Holdings Class A Commonwealth Bank Class E Commonwealth Bank Class J Commonwealth Bank Class K Commonwealth Bank Class L Commonwealth Bank Class M Commonwealth Bank Class N Fidelity Bank Class A Focol Class B
CORPORATE DEBT - (percentage pricing) 52WK HI 100.00 100.00 100.00
52WK LOW 100.00 100.00 100.00
BAHAMAS GOVERNMENT STOCK - (percentage pricing) 115.92 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
113.70 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
VOLUME
VOLUME
EPS$ 0.304 1.351 1.086 0.220 -1.134 0.000 0.185 0.551 0.508 0.541 0.528 0.094 0.166 0.510 0.612 0.960 0.650 0.703 0.756 0.000
DIV$ 0.090 1.000 0.000 0.160 0.000 0.000 0.187 0.260 0.200 0.360 0.610 0.060 0.040 0.240 0.275 0.000 0.280 0.120 0.640 0.000
P/E 13.4 11.7 8.4 15.9 N/M N/M 35.0 15.4 11.5 19.3 26.5 23.2 9.2 11.4 14.3 11.4 12.7 9.4 15.8 0.0
YIELD 2.22% 6.31% 0.00% 4.57% 0.00% 0.00% 2.89% 3.06% 3.43% 3.45% 4.36% 2.75% 2.61% 4.14% 3.13% 0.00% 3.39% 1.82% 5.36% 0.00%
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.00% 0.00% 0.00% 0.00% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 6.25% 7.00% 6.50%
INTEREST 7.00% 6.00% Prime + 1.75%
MATURITY 19-Oct-2017 31-May-2018 19-Oct-2022
6.95% 4.00% 4.00% 4.25% 4.25% 4.50% 4.50% 6.25% 6.25% 4.00% 4.25% 4.50% 6.25%
20-Nov-2029 15-Dec-2017 30-Jul-2018 16-Dec-2019 30-Jul-2020 15-Dec-2021 30-Jul-2022 15-Dec-2044 30-Jul-2045 26-Jun-2018 26-Jun-2020 26-Jun-2022 26-Jun-2045
MUTUAL FUNDS 52WK HI 1.99 3.90 1.92 167.58 138.35 1.45 1.67 1.55 1.09 6.94 8.65 5.92 9.94 11.15 10.46
52WK LOW 1.67 3.04 1.68 164.74 116.70 1.39 1.60 1.50 1.03 6.41 7.62 5.66 8.65 10.54 9.57
FUND CFAL Bond Fund CFAL Balanced Fund CFAL Money Market Fund CFAL Global Bond Fund CFAL Global Equity Fund FG Financial Preferred Income Fund FG Financial Growth Fund FG Financial Diversified Fund FG Financial Global USD Bond Fund Royal Fidelity Bahamas Opportunities Fund - Secured Balanced Fund Royal Fidelity Bahamas Opportunities Fund - Targeted Equity Fund Royal Fidelity Bahamas Opportunities Fund - Prime Income Fund Royal Fidelity Int'l Fund - Equities Sub Fund Royal Fidelity Int'l Fund - High Yield Fund Royal Fidelity Int'l Fund - Alternative Strategies Fund
NAV 1.99 3.90 1.92 167.58 136.68 1.45 1.67 1.55 1.09 6.94 8.65 5.92 9.59 11.15 9.57
YTD% 12 MTH% 2.33% 4.05% 3.34% 6.09% 1.63% 2.99% 3.41% 5.18% 2.95% -0.58% 2.51% 3.84% 2.48% 4.47% 2.20% 3.79% 5.03% 3.89% 4.05% 8.28% 5.93% 13.53% 2.73% 4.73% 3.97% -3.53% 2.96% 4.33% -4.26% -6.22%
NAV Date 31-Jul-2016 31-Jul-2016 27-Jul-2016 30-Jun-2016 30-Jun-2016 31-Aug-2016 31-Aug-2016 31-Aug-2016 31-Aug-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016 31-Jul-2016
MARKET TERMS BISX ALL SHARE INDEX - 19 Dec 02 = 1,000.00 52wk-Hi - Highest closing price in last 52 weeks 52wk-Low - Lowest closing price in last 52 weeks Previous Close - Previous day's weighted price for daily volume Today's Close - Current day's weighted price for daily volume Change - Change in closing price from day to day Daily Vol. - Number of total shares traded today DIV $ - Dividends per share paid in the last 12 months P/E - Closing price divided by the last 12 month earnings
YIELD - last 12 month dividends divided by closing price Bid $ - Buying price of Colina and Fidelity Ask $ - Selling price of Colina and fidelity Last Price - Last traded over-the-counter price Weekly Vol. - Trading volume of the prior week EPS $ - A company's reported earnings per share for the last 12 mths NAV - Net Asset Value N/M - Not Meaningful
TO TRADE CALL: CFAL 242-502-7010 | ROYALFIDELITY 242-356-7764 | FG CAPITAL MARKETS 242-396-4000 | COLONIAL 242-502-7525 | LENO 242-396-3225
has not yet placed a cost on the damage Hurricane Matthew has inflicted on the Royal Bahamian. “We’re just putting the figures together now” he added. “We have a quantity surveyor coming in to see what the damages are going to cost us.” Last month, following an abrupt closure which saw 600 employees made redundant, Sandals outlined a $4 million renovation to be undertaken during a twomonth closure of its Cable Beach property. Sandals executives said the work was being “fast tracked” for what is shaping up to be its best winter season ever. Those upgrades and repairs, which were to
Baha Mar receiver: No Matthew delay to remobilisation Frompg B1 Emphasising that teams from Baha Mar and China Construction America (CCA), the project’s main contractor, were still carrying out post-Matthew assessments, Mr Winder said they were inspecting all the property’s rooms for water damage and other problems. “I don’t think so, but I can’t give a definitive answer on that,” Mr Winder replied, when asked whether Matthew’s impact would delay both Baha Mar’s remobilisation and construction completion. “I don’t know of anything at this stage that will delay the process. As far as I’m concerned, we’re on schedule to move forward, and we have well over 200 personnel on the ground.” He described them as “regular CCA folks”, and added: “We’ve still got to engage sub-contractors and that kind of stuff.” Mr Winder said Baha Mar had suffered damage to its landscaping, as Matthew’s winds took a toll on the property’s trees and vegetation, but implied that the resort properties had sustained no physical or structural damage. The Melia Nassau Beach Resort, the only Baha Mar
Raymond Winder property currently open to paying guests, will remain operational post-Matthew, the Deloitte & Touche managing partner added. When asked whether it might have to close for hurricane repairs, he replied: “No chance. As of now, we’re moving forward. It probably has some small damage, too, but nothing to cause us any major concerns. There is nothing that I am aware of that could cause us any concern.”
NOTICE
NOTICE is hereby given that SHEILA PETIT-PHAR of Calton Point, Treasure Cay, Abaco, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for registration/naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 12th day of October, 2016 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, Bahamas.
PAGE 4 , Wednesday, October 12, 2016
‘Dismay at Building suppliers ‘overwhelmed’ by slowness’ of electric post-Matthew rush nately, with the storm hitrestoration From pg B1 ting Florida, I didn’t get as From pg B1
press conference every day to update people on what’s going on, put it on Facebook and What’s App; just get the information out. “It would take away a lot of complaints if people knew there was a plan and a programme.” BPL’s restoration efforts yesterday came under fire from both Leslie Miller, the last executive chairman under the ‘old BEC’ structure, and Paul Maynard, president of the union that represents the utility’s line staff (see news section). Both criticised the pace at which BPL is making progress, suggesting it would have been much faster under the ‘old BEC’, and claiming that the utility’s efforts lacked sufficient manpower (help from outside contractors) and co-ordination. BPL, though, has said it is dealing with numerous wires downed by Matthew, while the devastation and proximity of surrounding tree branches has complicated efforts to rebuild its transmission and distribution network. Electricity supply is now the single biggest issue impacting post-Matthew recovery efforts on both New Providence and Grand Bahama. It is vital to the provision of water supply, and the ability of businesses to protect themselves from looters and thieves with electronic security systems. It is also key to the restoration of many of Nassau’s traffic lights, which have been out of action since the storm, causing vehicular chaos on the streets. Mr D’Aguilar said just three of his 10 Superwash locations had BPL power on Monday, leaving him “to assume” that 70 per cent of New Providence was then without power using this “unscientific approach”. He added that the absence of electricity supply had also contributed to the gas station queues at the weekend, as businesses and homeowners had been forced to restock with diesel to run their generators. Mr D’Aguilar said his 10 laundromats required a total 1,680 gallons of diesel per day to keep running, while BISX-listed AML Foods, for which he is chairman, needed around 2,500 gallons.
overwhelmed right now. “We still have quite a lot of shingles left because we are the biggest shingles supplier, so I don’t see us running out any time soon. Some of the colours might not be what people want, but as far as shingles are concerned we have quite a lot still in stock.” Mr Darville, though, acknowledged that plywood supplies are a concern. “I have plywood on the way,” he said. “Unfortu-
much as I wanted to get, but I got some nonetheless. The prices have gone up because they have their own problems.” He explained: “They boarded up just like we did, so plywood supplies are very short right now, so it’s supply and demand. People need it and they are going to have to pay. It’s unfortunate, but it’s just supply and demand. “I don’t think it would have been as bad if it hadn’t
hit Florida. They’re going to take care of themselves first, and that’s why I wasn’t able to really get what I wanted to get. Luckily we buy a lot of plywood, and I was able to use that as a bargaining chip to get a few trailers.” The damage inflicted by Hurricane Matthew on the south-eastern US, particularly Florida, Georgia and the Carolinas, has ignited a rebuilding and repair drive that is just as frenetic as the Bahamas’s own. With thousands more homes and businesses in the US in need of restoration, the Bahamas could experience a building materials shortage, and subsequent price hikes, as the likes of shingles and plywood are diverted for US usage.
Michael Maura, chief executive of Arawak Port Development Company (APD), the Nassau Container Port operator, yesterday backed up Mr Darville’s concerns. While vessel calls at the Arawak Cay-based port indicated that Florida’s key ports in Miami and Jacksonville were operating normally, Mr Maura said the devastation inflicted by Matthew in the US meant there would be pressures on the logistics and supply chains used by Bahamian merchants. “The biggest issue we have going forward is a competition for building materials because of the number of south-east homes that are competing for the same sheet of plywood, shingles
THE TRIBUNE and lumber,” Mr Maura told Tribune Business. “I would hope that the US authorities are watching very carefully as prices increase, as demand spikes and supply stays constant. We have to be mindful that plywood and lumber are commodities, so the prices can change and fluctuate frequently.” When contacted yesterday, a City Lumber employee indicated that the company was already out of the regular shingles. “We got sold out; only the architectural ones are left,” Tribune Business was told. Tops Lumber, another building supply firm, told Tribune Business it had now sold out of shingles, plywood and felt.
Analysis: Clinton, Trump tax plans are “mirror images” SANTA FE, N.M. (AP) — Hillary Clinton and Donald Trump’s tax plans are “mirror images” of one another, with the Democrat proposing steep tax hikes on the wealthy while the Republican candidate proposes even deeper reductions in the taxes paid by America’s richest people, according to an analysis released Tuesday. The Urban-Brookings Tax Policy Center found that the top 0.1 percent of taxpayers would pay $800,000 more in taxes on average under Clinton’s plan while Trump’s plan, their taxes would decline by more than $1 million. It found that Trump’s proposed cuts would cost $6.2 trillion over 10 years while Clinton’s would raise $1.4 trillion in new revenue over that time period — money the Democrat proposes using for new government programs. “Trump has a very, very large tax cut that’s primarily focused on high income individuals. Clinton has a significant tax increase” for those people, said Len Burman, a former Treasury official under President Bill
Clinton who is director of the center, a joint project between two nonpartisan Washington, DC think tanks. “In almost every meaningful respect these plans are mirror images.” The analysis does not account for the possible economic effects of the tax plans, but the authors nonetheless predicted that Trump’s plan would cut into the economy by by running up large deficits that cause interest rates to soar. The Trump campaign said the analysis is worthless because it lacks critical calculations. The “Tax Policy Center has wasted everyone’s time with a fraudulent analysis,” Trump senior policy adviser Stephen Miller said in a statement. By contrast, an analysis by the Tax Foundation, which advocates for lower taxes, found Trump’s proposal could create $2 trillion in new tax revenues by triggering growth. But even that analysis found it would leave a net deficit and that more of its benefits would accrue to wealthier taxpayers. The Tax Policy Center’s new analysis found that
Democratic presidential candidate Hillary Clinton arrives to speak at a rally at The Ohio State University in Columbus, Ohio, Monday, Oct. 10, 2016. (AP Photo) Trump’s proposals would focus on reducing tax on capital, which would encourage more work, investment and savings. It said Clinton’s proposals could have the opposite effect by hiking up levies on capital. However, the analysts noted
that Clinton has proposed new spending that could offset some of the negative economic impact of highend tax increases. Clinton’s tax hikes would fall almost exclusively on businesses and taxpayers in the top 1 percent. The anal-
ysis found that some of the cuts in the plan — including a doubling of the child tax credit the Clinton campaign announced Tuesday morning — could lead to a 1 percent increase in income for the poorest 20 percent of U.S. households.
Britain’s FTSE 100 stock index hits record as pound tanks LONDON (AP) — Britain’s top stock market index, the FTSE 100, struck a record high on Tuesday amid hopes that many of its listed companies will benefit from the pound’s slide in currency markets. While the pound has tanked following the June vote to leave the European Union, the FTSE 100 has surged. On Tuesday, renewed worries over the cost of Brexit piled pressure on the pound, pushing
the stock index to an alltime high of 7,129.83. It lost some of those gains later, to close down 0.4 percent at 7,070.88. At first glance, the stock gains since the June 23 referendum may appear perverse — after all, the fall in the pound indicates that investors are less hopeful about the British economy as the government looks to break away from the EU’s single market. But the pound’s decline,
while a drag on British spending abroad, is potentially good for British firms that already have big business interests outside the U.K. And the money they make abroad will be worth more when it is brought back to the U.K. There are many such international companies in the FTSE 100, from oil giants like BP and Shell to educational publishers like Pearson and fashion houses such as Burberry.
Cara Business Ltd. Company No. 1787248 (In Voluntary Liquidation)
NOTICE SOUTHSIDE MOUNTAIN INC. In Voluntary Liquidation
NOTICE is hereby given pursuant to Section 204 (1)(b) of the BVI Business Companies Act, 2004 that Cara Business Ltd. is in voluntary liquidation. The voluntary liquidation commenced on 3rd October, 2016 and Karin Liechti of Pflugstrasse 10/12, 9490 Vaduz, Lichtenstein has been appointed as the Sole Liquidator.
Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, SOUTHSIDE MOUNTAIN INC. is in dissolution as of October 3, 2016 International Liquidator Services Inc. situated at 3rd Floor Withfield Tower, 4792 Coney Drive, Belize City, Belize is the Liquidator.
Dated this 3rd day of October, 2016 Sgd. Karin Liechti Voluntary Liquidator
LIQUIDATOR ______________________
NOTICE MARIO INVESTMENT ASSETS LTD. In Voluntary Liquidation
NOTICE MASNORM BUSINESS CORP. In Voluntary Liquidation
Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, SOUTHSIDE MOUNTAIN INC. is in dissolution as of October 3, 2016
Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, MASNORM BUSINESS CORP. is in dissolution as of October 3, 2016
International Liquidator Services Inc. situated at 3rd Floor Withfield Tower, 4792 Coney Drive, Belize City, Belize is the Liquidator.
International Liquidator Services Inc. situated at 3rd Floor Withfield Tower, 4792 Coney Drive, Belize City, Belize is the Liquidator.
LIQUIDATOR ______________________
LIQUIDATOR ______________________
As the pound drops — it’s fallen around 20 percent since June 23 — exporters have seen their goods become more cost competitive in international marketplaces. “Brexiters might point to the FTSE’s rise as a sign of strength but this is very much a story of (pound) weakness boosting foreign earnings, which account for around two-thirds to threequarters of FTSE 100 company revenues,” said Neil Wilson, markets analyst at ETX Capital. While the pound’s slide against the dollar has captured most of the headlines, especially Friday, when it plunged about 6 percent at one point to a 31-year low of $1.1789, the currency is posting equally dramatic declines against the euro, which is used by 19 EU countries. One euro is now worth 0.90 pounds compared with around 0.76 pounds just prior to the Brexit vote result. The irony of the pound’s dramatic fall is that it will help British businesses secure market share in the EU’s single market, of which Britain is still a member until at least 2019, by making their goods more competitive. Having suffered an immediate slide in the wake of the Brexit vote, the pound settled for much of the rest
of the summer. But that changed at the start of this month when the government of new Prime Minister Theresa May started to lay out its vision for Brexit. May, who replaced David Cameron in July, said she will invoke by the end of March the Article 50 of the EU treaty, the move that will officially start two years of talks on Britain’s exit. She also signaled that her government would prioritize controls on immigration over access to the EU market that is so valuable to many British companies. A report in The Times newspaper on Tuesday, citing leaked papers from the Treasury department, said a so-called “hard Brexit” could lead to government tax revenues collapsing by 66 billion pounds ($81 billion) a year and that the country’s GDP could be 9.5 percent smaller if Britain leaves the single market and operates under standard World Trade Organization rules. The report helped put further pressure on the pound. Add the uncertainty related to the Brexit negotiations and the Bank of England’s policies, which could see interest rates cut further, and the outlook remains bleak for the pound. If not necessarily for stock portfolios.
NOTICE GLOBE AVIATION INTERNATIONAL SERVICES LTD. In Voluntary Liquidation Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, GLOBE AVIATION INTERNATIONAL SERVICES LTD. is in dissolution as of October 3, 2016 International Liquidator Services Inc. situated at 3rd Floor Withfield Tower, 4792 Coney Drive, Belize City, Belize is the Liquidator. LIQUIDATOR ______________________
THE TRIBUNE
Wednesday, October 12, 2016 PAGE 5
Justices raise doubts about $399m judgment against Samsung WASHINGTON (AP) — The Supreme Court raised serious doubts Tuesday about a $399 million judgment against smartphone maker Samsung for illegally copying parts of the patented design of Apple’s iPhone. Justices hearing arguments in the long-running dispute seemed troubled that Samsung was ordered to pay all the profits it earned from 11 phone models, even though the features at issue are just a tiny part of the devices. But some justices struggled over how exactly a jury should be told to compute damages if the case is sent back to a lower court. “If I were a juror, I wouldn’t know what to do,” said Justice Anthony Kennedy.
Justice Stephen Breyer appeared to embrace a test proposed by a group of internet companies including Facebook and Google that would outline new limits on such damage awards. Other justices seemed to favor a different test proposed by the Obama administration. The outcome could have ripple effects across the high-tech industry as the court balances the need to encourage innovation against a desire to protect lucrative design patents. The case is part of series of high-stakes lawsuits between the technology rivals that began in 2011. None of the early generation Samsung phones involved in the lawsuit remains on the market. Cupertino, Californiabased Apple sued over
South Korea-based Samsung’s duplication of a handful of distinctive iPhone features for which Apple holds patents: the flat screen, the rounded rectangle shape of the phone, and the layout of icons on the screen. The companies are wrangling over how much Samsung is required to compensate Apple under an 1887 law that requires patent infringers to pay “total profit.” At issue is whether that means all the profits from phone sales, or just the profit related to the specific components that were copied. Samsung says the hefty award ignores the fact that its phones contain more than 200,000 other patents that Apple does not own. Apple argues that the ver-
Attorney Kathleen Sullivan, representing Samsung, leaves the Supreme Court in Washington, yesterday, after presenting oral arguments before the Justices on monetary damages Samsung owes Apple for alleged violation of smart phone design patents. (AP Photo)
dict is fair because the iPhone’s success was directly tied to its distinctive look. The federal appeals court in Washington that hears patent cases has ruled that Apple was entitled to all the profits. Samsung’s lawyer Kathleen Sullivan told the court that total profits should be limited only to the sliver of the product that was copied. She said the parties could use consumer surveys and other expert testimony to show how much the design affected sales. The justices seemed open to the idea, but several kept wondering how it would play out using the
example of the Volkswagen Beetle, a car with a quirky design that surged to popularity in the 1960s. “It may be that the body accounts for only 10 percent of the cost of the car, but 90 percent of the profits are attributable to the shape of the car,” Justice Sonia Sotomayor said. But Justice Samuel Alito said the Beetle example was not that helpful. “I can’t get over the thought that nobody buys a car, even a Beetle, just because they like the way it looks,” he said. Breyer relied on other examples to suggest that a test limiting damages to
just one component that was infringed, and not the entire product, could work. “You know, wallpaper, you get the whole thing. A Rolls Royce thing on the hood? No, no, no. You don’t get all the profit from the car,” he said. Arguing for the Obama administration, Justice Department lawyer Brian Fletcher said the justices should adopt a multi-factor test that includes how prominent are the design features in the product, and to what extent consumers buy an iPhone or other device based on how it looks instead of what it can do.
Ireland unveils pro-growth 2017 budget, forecasts Brexit hit DUBLIN (AP) — Ireland unveiled a growthoriented 2017 budget on Tuesday that builds on the country’s rapid recovery from an international bailout with 1.3 billion euros ($1.45 billion) of spending increases and tax cuts. Finance Minister Michael Noonan told lawmakers that he expects Ireland’s economy to grow 4.2 percent this year and a more modest 3.5 percent next year because of the negative impact of the United Kingdom’s planned exit from the European Union. Ireland’s export-focused economy, driven by the operations of about 1,000
high-tech multinationals, is once again the fastest growing in Europe following the country’s 2013 emergence from a banking crisis. But Ireland’s biggest market is Britain, representing 16 percent of total exports and 40 percent of goods and services exported by domestic companies — and that trade is already taking a hit because the British pound’s exceptional weakness makes euro-denominated Irish products more expensive. Noonan said a tenth of Ireland’s 2 million-strong workforce is dependent on trade with Britain, which joined the then-European Economic Community
alongside Ireland in 1973. “Whatever the final settlement, what we know with certainty is that Brexit has increased risk to the Irish economy,” he said. Tuesday’s budget includes income tax cuts for low-wage workers, a 10 euro cent increase in the minimum wage to 9.25 euros ($10.25) per hour, big increases in spending on hospitals, new subsidies for child-care costs, tax breaks for first-time home buyers, and plans to create a national savings fund to safeguard Ireland against surprise economic shocks. Noonan, Ireland’s finance chief since 2011, said the government was committed Finance Minister Michael Noonan, centre, makes his way to Government buildings to deliver the Irish Budget, in Dublin, yesterday. Ireland has unveiled a 2017 budget that builds on the country’s rapid recovery from an international bailout with 1.3 billion euros ($1.45 billion) of spending increases and tax cuts. Finance Minister Michael Noonan says he expects Ireland’s economy to grow 4.2 percent this year but only 3.5 percent next year because of the negative impact of the United Kingdom’s planned exit from the European Union. (Brian Lawless/PA via AP)
to ending budget deficits and pruning national debt. He said the deficit this year would fall to 0.9 percent of gross domestic product, to 0.4 percent in 2017 and give way to budget surpluses by 2019. He said Ireland intends within the coming decade to reduce its debt-to-GDP ratio to 45 percent, well be-
low the eurozone’s muchviolated goal of 60 percent. Ireland’s national debt currently represents 76 percent of GDP. The lower the ratio, the more willing investors will be to keep buying Irish debt securities even in times of crisis. Unusually, Tuesday’s budget won backing from the main opposition party,
Fianna Fail, which took credit for shaping its contents. That reflects the new political reality in Ireland following February’s inconclusive election. A hung parliament in May formed a weak minority government that requires Fianna Fail support in parliamentary votes.
PAGE 6 , Wednesday, October 12, 2016
THE TRIBUNE
Hospital industry says it, too, is slammed by drug costs WASHINGTON (AP) — Hospitals, too, are getting slammed by sharp price increases in prescription drugs, and the industry is urging the next president and Congress to take up the issue. Consumer groups and insurers were already complaining loudly about drug costs. Now hospitals are turning up the volume as well, leaving the pharmaceutical industry more politically isolated. A study released Tuesday by the two biggest hospital lobbying groups found that overall, hospitals’ average annual inpatient drug spending increased by more than 23 percent between 2013 and 2015. The NORC study for the American Hospital Association and the Federation of American Hospitals found higher prices were primarily responsible for the spending increase, not the quantity of medications used. Measured on a per-admission basis, the increase was even more striking, nearly 39 percent. Per-admission spending on medications increased from $714 in 2013 to $990 two years later. NORC at the University of Chicago, which conducted the study, is an independent research organization. Hospitals say they can’t
easily pass on the cost of pricey drugs because private insurers and government programs like Medicare usually pay a predetermined amount per case. “The system is clearly broken,” Scott Knoer, chief pharmacy officer at the Cleveland Clinic, said in a teleconference sponsored by the two hospital lobbying groups. “The (pharmaceutical) industry has proven time and time again it can no longer regulate itself.” Calling the recent spate of price increases “egregious,” Knoer said there’s no way hospitals can get on top of it. When the price of one drug stabilizes, another zooms up. “It’s like playing whack-a-mole,” he said. One-third of hospitals in the study said drug prices had a “severe” impact on their budgets. Leaders of the two hospital groups said they want to avoid an outcome in which the government directly regulates drug prices, but they add that a debate is clearly needed. “The concern about the rising cost and prices of prescription drugs has been a bipartisan issue,” said Rick Pollack, president of the hospital association. “We are hoping this study will help inform policy makers as to the nature of
the problem.” The NORC study was based on data from 712 of the nation’s more than 4,300 community hospitals. It also analyzed drug purchase costs for 28 drugs from two major group purchasing organizations, which allow hospitals to maximize volume discounts for commonly used supplies. The study found that price increases seemed to be “random, inconsistent and unpredictable.” It found sizable price increases both for highly used drugs and some that get less use, as well as for branded and generic drugs. Inpatient drug spending grew more rapidly than retail prescription spending in 2014 and 2015. Among the examples: The unit price hospitals paid for acetaminophen, a commonly used pain reliever, rose by 135 percent from 2013 to 2015. Researchers developed a “per-unit” benchmark to measure prices across different dosages. The drug that saw the highest per-unit increase was Daraprim, an infectioncontrol medication that was originally approved in 1953. The study said its unit price jumped 3,695 percent, from $919.10 to $34,882.24 after it was acquired by Turing Pharmaceuticals.
various prescription drugs on the automated pharmacy assembly line at Medco Health Solutions in Willingboro, N.J. The nation’s hospitals say they, too, are getting slammed by sharp price increases in prescription drugs. The industry is urging the next president and Congress to take up the issue. A study released yesterday, by the two biggest hospital lobbying groups finds the average annual inpatient drug spending increased by more than 23 percent between 2013 and 2015. (AP Photo) Turing was formerly run by Martin Shkreli, a brash entrepreneur whose indifference to complaints about the company’s aggressive pricing earned him a reputation as pharma’s bad boy. He has pleaded not guilty to federal charges in an unrelated securities fraud case.
More than half of U.S. adults take prescription drugs, and according to a recent Kaiser Family Foundation poll most of those patients report no major problems affording their own medications. But consumers have been alarmed by the introduc-
tion of breakthrough drugs costing tens of thousands of dollars a year, along with a spate of seemingly arbitrary price hikes for older medications. More than 3 out of 4 say the cost of prescription drugs is unreasonable. A majority favors government action to curb costs.
Cash is piling up faster than Warren Buffett can invest it OMAHA, Neb. (AP) — Warren Buffett has the kind of money problem most people would envy: a growing mountain of cash. Nearly $73 billion piled up at Berkshire Hathaway by mid-summer, more than Buffett’s conglomerate has ever held before. And the total continues growing every day Buffett doesn’t make a major investment because Berkshire’s 90-odd businesses generate roughly $1.5 billion in cash every month.
Buffett’s options include buying entire businesses, picking up a few million shares of stock or investing more in companies Berkshire already owns, such as BNSF railroad and the utilities of Berkshire Hathaway energy. So far, Buffett appears to be mostly sitting on the cash since January, when Berkshire completed its biggest acquisition in its history, a $32.36 billion deal for aviation parts maker Precision Castparts.
YOUR
“I think he’s looking for the right price on something outstanding,” said investor Andy Kilpatrick, who wrote “Of Permanent Value: The Story of Warren Buffett.” Of course, not all of Berkshire’s cash is available because Buffett wants to keep at least $20 billion on hand at all times just in case Berkshire’s insurance companies have to pay a big claim or some other need arises. But Buffett says he’s always on the hunt for sizeable acquisitions that would
fit well inside Berkshire, but he won’t pay more than he thinks a company is worth. Buffett will only go after companies that fit his criteria for large, proven businesses he can understand and that have an enduring competitive advantage. “It’s hard to tell what he might be looking for,” said George Morgan, who teaches finance at the University of Nebraska at Omaha. “All we can do is wait and see.” Buffett never discusses what he might buy before-
hand, and he doesn’t talk much about all the deals he says no to. But that doesn’t stop investors from guessing what Buffett might buy next. Morgan’s favorite idea is that Berkshire might buy Mars Candy if the family that controls that privatelyheld firm ever wants to sell. Buffett has long used Snickers candy bars as the example when he explains the concept of a durable competitive advantage. The fact that Mars now
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Berkshire Hathaway Chairman and CEO Warren Buffett plays bridge outside the Borsheims jewelry store, a Berkshire Hathaway subsidiary, in Omaha, Neb. Buffett has a high-class problem: cash is piling up at Berkshire Hathaway faster than he can invest it. (AP Photo) plans to buy out Berkshire’s $2.1 billion in preferred stock in its Wrigley gum unit may sour speculation about Buffett adding another candy maker alongside Berkshire’s See’s Candy, but the repurchase will add even more cash to Buffett’s pile for other investments. Other investors speculate that Berkshire might continue expanding its utility unit. Over the past few years, Berkshire has spent $5.6 billion to buy Nevada utility NV Energy in 2013 and another $2.7 billion to buy Canadian power transmission provider AltaLink in 2014. Buffett has said that Berkshire will likely team up again with the 3G Capital investment firm at some point. They already worked together to buy Kraft Foods and Heinz, but it’s not clear when the next deal involving 3G might come. In the current interest rate environment, Berkshire is earning very little on its mountain of cash, but Buffett isn’t likely to feel much pressure from shareholders to make a quick acquisition or start paying a dividend for the first time since he took over Berkshire in 1965. After all, Buffett still controls nearly one-third of the voting power of Berkshire’s stock, and two years ago Berkshire shareholders overwhelmingly rejected the idea of a dividend. And Berkshire shareholders don’t have to look back very far to see how valuable a pile of cash can be. In the wake of the financial crisis of 2008, Buffett offered billions in financing to Goldman Sachs, General Electric, Harley-Davidson and others in return for steep interest payments and, in some cases, preferred stock. But until Buffett finds his next deal he’ll keep doing what he has for decades: read more business reports, take the occasional phone call and wait for the right pitch. Buffett compares investing to baseball, except that investing is a game where the hitter can stand at the plate indefinitely waiting for the right pitch.
THE TRIBUNE
Wednesday, October 12, 2016 PAGE 7
CAN MAKE A DIFFERENCE IN THE LIVES OF THE CHILDREN AT RANFURLY
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PAGE 8 , Wednesday, October 12, 2016 THE TRIBUNE
US stock indexes head sharply lower; oil falls By AP Business Writer
A batch of disappointing company earnings news helped put investors in a selling mood Tuesday, pulling U.S. stocks sharply lower. Health care companies led the broad market slide, which more than wiped out gains from the day before. Materials, utilities and technology stocks were among the big decliners. Energy stocks also closed lower as crude oil prices declined. Several companies, including Alcoa, reported quarterly results that fell short of Wall Street’s expectations. While investors will get to size up earnings from many more companies in coming weeks, the downbeat start to the third-quarter earnings season weighed on the market, said JJ Kinahan, chief strategist at TD Ameritrade. “It’s just a bad tone to get us started,” Kinahan said. “We’ve also been in a really low-volatility environment. This is the first day we’ve seen some heavier trade in a while.” The Dow Jones industrial
average fell 200.38 points, or 1.1 percent, to 18,128.66. Earlier, the average was down as much as 267 points. The Standard & Poor’s 500 index lost 26.93 points, or 1.2 percent, to 2,136.73. The Nasdaq composite index slid 81.89 points, or 1.5 percent, to 5,246.79. Indexes headed lower from the start of trading Tuesday and never got out of the red. Traders hammered shares in Alcoa and genetics research company Illumina after the companies reported results that fell short of financial analysts’ forecasts. Alcoa, which is due to split into two companies on Nov. 1, slid $3.60, or 11.4 percent, to $27.91. Illumina sank $45.86, or 24.8 percent, to $138.99. Fastenal also delivered quarterly results that failed to impress investors. The maker of industrial and construction fasteners fell $2.16, or 5.1 percent, to $39.96. Traders also sold shares in St. Jude Medical after the medical device maker warned that the lithium battery in some of its implanted heart devices may run out
the New York Stock Exchange. U.S. stock indexes moved lower in early trading yesterday, weighed down by a slide in materials and health care companies. Energy stocks also fell as the price of crude oil headed lower. The stock market was giving back some of its gain from the day before. Apple rose after rival Samsung discontinued its troubled Galaxy Note 7. (AP Photo) of energy prematurely. The stock lost $2.87, or 3.5 percent, to $78.41. Shares in Abbott Laboratories, which in April agreed to buy St. Jude for $25 billion, also fell. Abbott slid $2.34, or 5.4 per-
cent, to $41.16. Some companies benefited from others’ bad news. Apple was got a slight boost after rival Samsung announced it was discontinuing its Galaxy Note 7
phone permanently because of overheating handsets. The Galaxy Note 7 competed with Apple’s iPhone. Apple gained 25 cents to $116.30. Crude oil prices fell a day
after spiking to their highest level in a year, a move that disappointed some investors. “Many people thought crude would use its momentum to make a run at its recent highs and it completely faded,” Kinahan said. Benchmark U.S. crude oil lost 56 cents, or 1.1 percent, to close at $50.79 a barrel in New York. Brent, the international standard, slid 73 cents, or 1.4 percent, to close at $52.41 a barrel in London. In other energy trading, wholesale gasoline fell a penny to $1.48 a gallon. Heating oil slipped 2 cents to $1.59 a gallon. Natural gas shed 4 cents to $3.24 per 1,000 cubic feet. The major stock indexes in Europe also closed lower. Germany’s DAX fell 0.4 percent, while France’s CAC 40 slid 0.6 percent. Britain’s FTSE 100 slipped 0.4 percent. Markets in Asia were mixed. Japan’s benchmark Nikkei 225 rose 1.0 percent, while Australia’s S&P/ ASX 200 added 0.1 percent. South Korea’s Kospi lost 1.2 percent. Hong Kong’s Hang Seng dropped 1.4 percent.
Obama pushes US goal to send humans to Mars by 2030s WASHINGTON (AP) — President Barack Obama sought Tuesday to reinvigorate his six-year-old call for the U.S. to send humans to Mars by the 2030s, a mission NASA has been slowly and quietly trudging away at. The White House was calling attention to government contracts awarded to six companies to build prototypes for “habitats” that could sustain human life in deep space. One such privately developed habitat — an inflatable room —is already attached to the International Space Station. Obama also said that within two years, private companies like SpaceX and Boeing will taxi astronauts to the space station with NASA as a customer.
“These missions will teach us how humans can live far from Earth, something we’ll need for the long journey to Mars,” Obama wrote in an op-ed on CNN’s website . He said the ultimate goal is for humans eventually to stay on the red planet “for an extended time.” NASA officials and outside space experts said there is little new in what’s coming out of the White House on Mars, something NASA has taken to calling its “Journey To Mars .” “There’s nothing big here at all, unless you haven’t been paying attention,” said former George Washington University space policy chief John Logsdon. “It’s a re-focusing of the fact that he set these goals and NASA has
been pursuing them.” Alan Ladwig, a former top NASA official in the Obama and Clinton administrations, said he likes the intent, “but it’s a bit late in the term to shine a light on the humans to Mars exploration.” The president planned to discuss the initiative further when he meets with scientists, engineers and academics at an innovation summit Thursday in Pittsburgh. Obama first set a goal in 2010 to send humans to Mars by the 2030s, but the initiative has attracted little attention since then. Numerous Government Accountability Office reports have warned of the challenges in meeting that goal, most notable a lack of substantial
In this image provided by NASA shows NASA’S Journey to Mars. President Barack Obama sought yesterday, to reinvigorate his six-year-old call for the U.S. to send humans to Mars by the 2030s, a mission NASA has been slowly and quietly trudging away at. (NASA via AP) U.S. government funding Obama did not elaborate on what a Mars mission would cost or how the U.S. would pay for it. But he said it will require years of patience, testing and educa-
tion. “The question is why and how does this support U.S. national interests,” said Scott Pace, a NASA associate administrator during the George W. Bush administra-
tion and space policy chief at George Washington University. He said returning to the moon instead of going to Mars makes more sense for both commerce and international cooperation.