Natario McKenzie’s recent article on Lombard Odier’s financing deal with BPC (Bahamas Petroleum Company) sets out Lombard Odier’s regret at their “mistake” in providing funding to BPC. The offshore drilling project does not, apparently, fit their usual financing profile.
Aside from my surprise that the venture capitalist’s own no doubt stringent checks had allowed this deal to go through, I felt Natario McKenzie’s seeming willingness to leave matters at that left one pertinent question hanging in the air, namely: the terms of the deal were extremely advantageous to Lombard Odier, offering a guaranteed return of 15 percent on their investment in a matter of weeks. This was as an absolute minimum. The opportunity to sell if the share price rose was there, of course, but if the BPC share price were to plummet, Lombard Odier would still be compensated at the agreed level. So, the question must be, having recognized their mistake, will they now forego the significant profit arising from this deal?
We are talking of potentially millions of dollars here. I am sure there are any number of charities in The Bahamas which would welcome some share of that. Certainly, the donation of the hefty profits arising from this “mistake” would be a more tangible demonstration of Lombard Odier’s regret than mere words.
I hope to see a follow-up article addressing this important aspect of the story. I might add, I have no brief for BPC and believe strongly that any decision regarding oil extraction in Bahamian waters is a matter solely for the people and government of The Bahamas. This is a different question, however, relating to the actions, and reactions, of a venture capitalist.