Mr Craig Reynald

Q. The OCM Group (formerly CCN) continues to outperform, leading the stock market in its record share price appreciation of 85% over 2004 with an EPS of $1.09 compared to $0.80 in 2004, a growth of 36%. Are you satisfied with these results and were your personal objectives met?   

A. Yes I am satisfied with these results. They represent the highest level of growth achieved by the Group year on year. My personal goals were to exceed $50 Million after tax profit and cement the merger with The Nation Corporation and both of these were achieved. Although gross revenue increased by 20% it’s encouraging to note that net profit before tax increased by 37%, thereby reflecting continuing improvements in operating efficiency and performance. Both the Express and TV6 contributed to these improved efficiencies. The Employees of the entire Group should be complimented on their loyalty, dedication and sacrifice which made these results possible.   

Q. In 2005 we saw the entrance of new local channels into the market. How do you foresee this affecting the domestic market and TV6?
A. Competition is good for TV6 and the country. We have been competing with ourselves, which requires a lot of vigilance and self-analysis. However, the new entrants are all cable based. They did not have to incur the level of investment to create a national broadcasting network as we did. It is therefore more imperative on us to be competitive and profitable. These are early days. They will  have to deliver sustainable service and professional standards in order to win the viewer and advertiser  support that is necessary for success.

Q. The Group entered a Yen Interest Rate Swap on the 24th May 2002 and exited on the 18th November  2005. Was this done to the Group's advantage?  CEO’s Perspective   
A. We entered this swap to hedge against increasing interest rates at a time when we were highly leveraged as a result of our DirectTV investment. Although we have been out of this business for the last five years, we were unable to exit the derivative instrument because of the depreciating US dollar. However, it became possible for us to do so in November 2005 at a small gain to the company.   

Q. For the first time in Eastern Caribbean history, we have the merger of two regional media entities, each being the dominant market leader in its territory. Could you reveal the nature of the relationship that has existed between the Nation and CCN over the years?   

A. The Nation Corporation is the largest media group in Barbados, and has been associated with CCN since its incorporation in 1973 and we have been represented on each other’s Boards of Directors for many years. The Nation owns and operates the leading circulation newspaper publisher in Barbados (Nation Publishing, which publishes the Daily Nation and the Sunday Sun), the leading radio station group in Barbados (Starcom Network, which operates among other stations, the Voice of Barbados), and other subsidiaries which provide internet and related services (Nationlogic) and  property rental services (Nation Properties) both to The Nation and to third parties. The two companies share common roots as newspaper publishers with local voices founded in the early days of Caribbean independence. Both companies subsequently expanded into the broadcasting industry as the opportunity arose. Our association has been enhanced over the years by various co-operation arrangements. In particular, the two companies had taken minority equity positions in one another, which were built into reciprocal 20% cross shareholding stakes in 2001. Today CCN and Nation  share a common approach to our industry, a common Chairman in Sir Fred Gollop, the Chairman of Nation since 1973, and elected as Chairman of CCN in 2002, and a common vision for the future.   

Q. What are some of the key benefits redounding to stakeholders arising from the merger?   
A. The Board of Directors and management of both  CCN and The Nation Corporation share a common  vision for the creation of a Caribbean-owned media  company with an independent editorial voice, which  serves Caribbean readers, viewers and advertisers, both  in the region and worldwide, with leading media brands  in newspaper publishing, television and radio  broadcasting, and the internet.  The Board and management of both operations are  confident that, with the continued independence and  enhanced financial strength achieved by the merger, we  will be able to establish a Caribbean Media organization  that accurately represents the region to each other and  to the rest of the world.    Q. Over 70% of mergers have been deemed unsuccessful, why should this one be different?   

A. Both The Nation Corporation and CCN share  common values and vision for the media in the  Caribbean. We also have similar equipment in many  areas and common suppliers. I therefore expect that  with the integration of our processes and systems, that  economies would be achieved far greater than what  would have been possible individually. We also both  enjoy positive cash flows. This together with the asset  base of the merged corporation provides us with the  means to pursue relationships that should result in rapid  growth and better returns.   

Q. How does the merger of these two regional media houses augur for the development of CSME (Caribbean Single Market and Economy)?   

A. To paraphrase Prime Minister Owen Arthur, “this  merger represents the new face of the CSME”. I expect  that the rate at which such relationships are forged will  be accelerated from hereon. 

Q. Could you explain the process by which the  merger with The Nation Corporation was effected? 

A. The merger of CCN and The Nation Corporation  was a non-cash transaction and was effected by way of  amalgamation whereby:  All of the shares of the amalgamated company in  Barbados are owned by CCN; and previous shareholders  of The Nation Corporation would receive 27.7M new  series “B” ordinary shares in CCN in satisfaction of their  entitlement under the amalgamation and merger process  and in exchange for their shares in the Nation.  Shareholders in CCN retained their existing shares,  which are known as series “A” ordinary shares. Crossholding  investments consisting of investments in The  Nation Corporation by CCN and CCN investments in  The Nation Corporation will be cancelled. 65.7M shares  would be outstanding after the new issuance. The  combined company is owned 58% by previous CCN  shareholders and 42% by previous Nation shareholders.  The Board of Directors of One Caribbean Media will  reflect the relative values of the two companies in the  merger, comprising of five (5) directors from CCN and  four (4) from The Nation Corporation.   

Q. There was the adoption of a shareholder rights plan. What was the objective of this plan?   

A. This was an integral part of the merger and I  believe we were the first to introduce this mechanism to  the market. The intention was to enhance ownership  stability, to protect against disruptive takeover abuses  and to ensure continued Caribbean ownership of One  Caribbean Media. Such a Rights Plan has been utilized  by many companies worldwide, has been studied  extensively by academics and market analysts, and is  generally seen to be fair to all shareholders without  negative effects on share price. 

Q. What are the mechanics of these Rights  distribution and how will it be triggered? 

A. Each shareholder of record on the record date  (expected to be the effective date of the merger, January  1, 2006) would receive a distribution of one Right for  each ordinary share of the Company (the “Rights”).  Initially, the Rights would be represented by certificates  for the Company’s ordinary shares, would not be traded  separately from the ordinary shares and would not be  exercisable. Rights under the plan would only be  exercisable if a person or group (other than certain grand  fathered persons) becomes the beneficial owner of, or  announces a tender offer for, 20% or more of the stock  of the Company.  All shareholders – other than the acquiring person or  group – would then have the right to acquire additional  ordinary shares at half the then listed price, and, in the  event of a subsequent merger or other acquisition of the  Company, to buy ordinary shares of the acquiring entity  at half the then listed price. The dilution effect of the  Rights would significantly increase the cost of an  unwanted takeover attempt.  CEO’s Perspective The Rights Plan would likely force such an acquiring  person or group to negotiate directly with the Board of  Directors, provide the Board with adequate time to  consider any offer, and assure all shareholders of a fair  price for and fair treatment of their shares. Under the  Rights Plan, certain persons or groups, who, as of the  date of the merger, beneficially own over 20% of the  Company’s ordinary shares would be considered grand  fathered persons, and their ownership would not trigger  the Rights.  However, any additional acquisitions (subject to a  cushion permitting such a grand fathered person to  purchase an additional 1% of the Company’s ordinary  shares) would trigger exercisability of the Rights. The  Rights Plan would provide that the Rights would expire  in ten years.  It is contemplated that at or prior to such ten year  anniversary, the Board of Directors of the Company  would consider the Rights Plan again with a view  towards determining whether the plan should continue  in the form initially adopted be amended in any respect,  or be terminated at such time. 

Q. Is it the intention to have a post merger share  issue? 
A. Yes. It is planned, after completion of the merger,  to cross-list the ordinary shares of the Company in  Barbados and, as soon as is practicable, to make a new  issue of up to 3,000,000 ordinary shares in Barbados  and Trinidad, in order to provide an opportunity to new  employees of the Company and the Barbados public, as  well as to existing employees of CCN and the Trinidad  and Tobago public, to invest in the newly combined  Company. Proceeds from the sale of shares will be used  to repurchase an equivalent number of shares from the  ESOP, thereby reducing those holdings. The effect of this  would be that the number of issued and outstanding  shares of the company would be the same after the  issue, as it was before the issue. Shareholders’ interest  would therefore not be diluted by reason of the new  issue. 

Q. There is a concern that Editorial independence  could be compromised in the merged organization.  How are you going to ensure that this does not take  place? 
A. Newspapers and news departments serve the  communities to which they belong. Both The Nation  Corporation and CCN have functioned over the years  with an abiding respect and passion for editorial  independence. We both felt it was therefore necessary  to incorporate this protection within the clauses of the  Memorandum of Agreement to the merger. The Clause  asserts that “the Editorial control and product output of  the Barbados and Trinidad media shall remain under the  primary authority and control of the respective national  entities”. This remains one of our critical success factors.