In the idyllic village of Tortola in the British Virgin Islands, steps from the Inner Harbour, sits an unsuspecting two-story structure with a pharmacy on the lower floor and offices on the second floor.
Taking space inside those offices in Vanterpool Plaza is Bluestone Financial Ltd., an investor group that controls an e-commerce platform acquired in October 2012. The digital Amazon-like website has its sights on U.S. Hispanics and Latin American consumers.
Now, Bluestone has its sights on some key Spanish Broadcasting System assets, thanks to a big increase in its stake in the Miami-based company controlled by Raul Alarcón Jr. But, it’s nothing new for Bluestone and the man who seeks more profits for that online platform.
In a Schedule 13D SEC filing made March 1, Bluestone — using its offshore offices in Tortola — reported that it now owns 14.51% of the total shares of SBS’s Class A common stock, presently trading on the OTC Markets with the ticker symbol “SBSAA.”
As of 9:55am Eastern on Monday, SBS stock was valued at 39 cents.
This puts the value of Bluestone’s stock at $235,862.64, as it is reporting ownership of 604,776 shares.
Those shares are “undervalued,” Bluestone noted in the SEC filing.
What’s the solution suggested by Bluestone and its Managing Director, David Tomasello?
SBS “should maximize shareholders value by partnering [or] selling part or all of the company to a bigger, global and well-managed content and distribution media company like Sony Corporation, who owns the content and conduit necessary to take Mega TV, [the] La Musica streaming app and other SBS divisions to the next level.”
The Mega TV operation has been the focal point of questions from Wall Street for years, with some asking from its launch in March 2006 if SBS was risking growth in its core radio business by attempting to pull viewers from bigger Spanish-language TV networks such as Univision, UniMás, Telemundo and LBI Media’s Estrella TV, which will soon debut at WGEN-8 in Miami.
Bluestone is one of those detractors, and wants SBS to consider abandoning its 12-year-old TV operation.
“By selling some underperforming and capital intensive assets like Mega TV, SBS will be able to deleverage the balance sheet, and grow faster by entering into fast-growing businesses that are language agnostic yet appeal to a broader Hispanic population,” Bluestone says.
In particular, Bluestone suggests that “a partnership or merger with bilingual e-commerce marketplace MercadoMagico.com” would allow SBS “to build a powerful Hispanic online ecosystem (e-commerce and entertainment) in the Americas and Southern Europe.”
It would also allow Bluestone, and Tomasello, to cash in on increased traffic and projected profitability at MercadoMagico — the e-commerce platform it has controlled since the Bluestone-backed NeoMagic Corp. snagged it some 5 1/2 years ago.
While SBS is obligated to make the SEC filing, it is not obligated to comment on the matter. The company refrained from issuing a statement.
Perhaps that’s the best thing for SBS, since Bluestone’s new effort to sway Alarcón is a reprise of an effort conducted in August 2014.
At that time, Tomasello — who also serves as Managing Partner of Madison Avenue financial house Attiva Capital Partners Ltd. — wrote to former Sony Pictures Entertainment Motion Pictures Group Chairperson Amy Pascal.
This is known to the public thanks to an explosive cyberattack led by the Wikileaks site that made her private emails known to the world. By February 2015, Pascal was dismissed by Sony for what it said with challenges on franchise film development.
In Tomasello’s email to Pascal, he praised Sony’s fiscal Q1 2014 performance, and how it had been “continuously buying Sony Corp. common stock” since the early 2012 naming of Kaz Hirai as President/CEO.
“We are still doing so, as our investment group has already amassed a big stake in SNE and would like to continue to do so as long as they continue to be undervalued,” Tomasello said to Pascal.
He then spoke of how Bluestone “started accumulating share of Spanish Broadcasting Systems [sic] and right now own around 9%” of the common stock.
Tomasello then said, “We’ve been pressing SBS for quite a while to find a partner for its TV/film division. Sony Pictures could co-produce and distribute its content in Spanish on Mega TV.”
Further, Tomasello wrote to Pascal of how Sony — in his view — “is the best partner not only on the TV side but also in the music/entertainment divisions, as SBS is the biggest Hispanic radio company in the USA.” The entertainment division in particular could “do well with Sony Music,” he wrote.
By January 2016, Attiva’s stake in SBS was liquidated. However, Bluestone remained very much involved with crafting a winning plan to monetize both its stake in Sony and its Amazon-for-Hispanics e-commerce site.
Such a plan may be for naught, given the control Alarcón exerts over the company founded by his father, the late Raul Alarcon Sr. Given his Class B super-voting powers, Alarcón enjoys overwhelming voting power at SBS.
Tomasello’s beef with this aspect of SBS’s operations has vexed him since August 2011, when his Attiva first made it known that Mega TV and Mega Films should be split off from SBS and sold to a bigger media company. Additionally, Attiva was pushing a candidate to be that buyer. Early speculation pointed to Time Warner; Sony merged as the intended suitor.
While the request was made eight years ago, Tomasello’s share acquisitions in both SBS and Sony could advance efforts at SBS to make a spin.
Or, they could end up in the ether — despite very public efforts by SBS to move forward with a recapitalization strategy announced on April 19, 2017. This included the June 9, 2017, closing the sale of SBS’s Pico Boulevard offices and studios in West Los Angeles for $10.34 million, and saying goodbye to its New York City brownstone housing the offices and studios of WPAT-FM “Amor” and WSKQ-FM “Mega 97.9 for $14 million.
Proceeds will go toward the repayment of its outstanding 12.5% Senior Secured Notes due 2017.
SBS is still working through its April 17 event of default tied to its 10¾% Series B Cumulative Exchangeable Redeemable Preferred Stock; the company did not repay the notes at their maturity date, setting the stage for a recapitalization strategy.
This has not led SBS down a path similar to that of Cumulus Media and iHeartMedia, with Chapter 11 bankruptcy not expected from SBS in the coming weeks.
Still, with SBS’s publicly traded shares struggling, could dissident investors finally sway Alarcón into saying goodbye to his visual entertainment properties?
If so, it would likely involve a visit to Coconut Grove, rather than a trek to Tortola. According to the Virgin Islands Daily News, the small two-story office building that has seen its share of negative publicity in recent years took a significant hit from Hurricane Irma. The pharmacy was looted but quickly restocked. Photos show the second floor of the structure suffering significant storm damage.
Vanterpool Plaza is also the home of the BVI satellite office for Panamanian law firm Icaza, González-Ruiz & Alemán. It’s also the home of 100 entities tied to businesses across the globe, including companies representing soccer superstars Jose Mourinho and Cristiano Ronaldo and two companies banned as of 2018 from providing unregulated offshore loans to English Premier League players.
The problem? Tax evasion.
In 2006, Vanterpool Plaza was the subject of a report regarding BVI-based company allegedly involved in money laundering schemes tied to Valley National Bank‘s New York offices. According to the New York District Attorney’s Office, some 11 businesses all had registered addresses of the plaza’s second floor. The bank cooperated with the investigation and was not charged with wrong-doing.
