255 Million + 395 Million in Debt Translates to A Victory for Belize, Says PM Barrow (BTL Arbitration)

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Updated: June 29, 2016

After almost seven years of court battles surrounding the takeover of Belize Telemedia Limited, the Government of Belize are now better informed on how much money they will need to settle and close this issue.  Early last month, a preliminary report was published by the Permanent Court of Arbitration in the Netherlands and from then it was reported that the estimate per share that the Ashcroft Alliance was stating would not be honored.  Prime Minister Dean Barrow gave the details of the Arbitration Award.

DEAN BARROW

“Preliminary this is what the figures look like. The total number of shares we acquired was 45 million 45,199,961. The per share award given by the tribunal is $5.6547 cents Belize. This is as opposed to the $10.23 cents Belize that the former owners claimed so that on the face of it the difference between the $5.6547 and the $10.23 represents a win for the government. Further of the $5.6547 valuation by the arbitration tribunal only $2.2674 dollars or 40% is actually for the shares so that $3.3873 or 60% of the so called per share value is actually compensation for the accommodation agreement. When we subtract the down payment of $65,087,944 Belize that we had already made on the award the balance that remains to be paid is by our calculations $191 million Belize dollars. Of that then fully 114.6 million Belizean dollars is for the accommodation agreement and it is only the rest of that 191 that is for the actual shares acquisition. Now there is also interest that we will have to pay on that amount of 191 million Belize. The interest is also divided in the portion of 40% attributable to the actual nationalization of the shares and 60% to the accommodation agreement so it follows the split with respect to the principle.”

The figures are pretty steep as Prime Minister Barrow announced but according to him, the Government is able to pay; he explained how.

 DEAN BARROW

” The $2.26 Belize that government paid per share for our acquisition of BTL is a win in any ball park. Recollect that in 2010 GOB was already able to sell a portion of those same shares for $5 each and we are even now proposing to sell some more of the shares also at $5 per share. That is more than twice the panel’s valuation of what the shares were worth in 2009 when we acquired them. Very simply we believe we will have no difficulty especially in view of the excess liquidity in the financial system getting all the money locally by way of the issue of government paper bills and notes. And the 40% that has to be converted into US and sent abroad will also be fairly comfortably covered by Central Bank reserves. Second please remember that we are currently selling…. $55 million dollars I had $60 million dollars here there was another $5 million but let me not deal with that for the minute but let me limit it to $60 million dollars worth of shares that we are selling in BEL and BTL. Even after that there will still be a little more headroom for selling additional shares in BTL without of course ever breaching the threshold that requires to maintain with SSB the 51% majority ownership so even after we sell the shares that we are currently selling in BEL there will be a little more headroom for some additional shares to be sold and a lot more headroom for selling additional shares in BTL. We anticipate being able to raise at least another $75 million, possibly $100 million if we go that way so that the borrowing for the award would be greatly lessened as a result. But of course we will need to decide whether it is not preferable to hold on to some of those shares and use the dividends which we expect as I said to be extremely bountiful use the dividends to service a more expanded GOB  borrowing in order to meet the compensation payments.”

And while Government says they have it within their capacity to pay the award and while Government says that this is a victory for Belize, Prime Minister assured the public that there will be no stagnation of the economy due to the excess liquidity in the system.  Prime Minister Barrow also made reference to the Super Bond and the Accommodation Agreement and how it has put a dent into the economy.

 DEAN BARROW

“We can’t be depriving the business sector, I won’t even say productive sector because there’s not a whole lot of lending taking place to the productive sector but lord man that is why it is a good deal for SSB to buy shares, that is why so many of the institutional members of the financial system, the non bank the insurance companies and all these people are in fact dying for some way that they can make an investment and get some returns while satisfying the statutory requirements that they face. So there can be no question at all of us depriving anybody by resorting to the commercial borrowing. Now the fact that it is more debt is of course consequential and something we can talk about. All I would say is this, were it not for the accommodation agreement this would have been an absolute breeze even with the accommodation agreement were it not for the super bond it would still have been a breeze to the extent that we do have to keep an eye on things in terms of the debt trajectory, in terms of the draw down on the reserves. I think the crunch is really going to come after there is the step up in the servicing of the superbond and when amortization begins but we have to take things as we find them but I think the people of this country must recollect that that is really where the most difficult, the most challenging and trying of our problems are; with respect to the superbond for which we got nothing. You’re talking about what we are talking now the $390 million plus look at what we got for it, what we have already collected, what we have it is ours to keep forever and it is something that keeps on giving to the people as opposed to the superbond but let me not get on my soap box.”

According to the Financial Secretary, Joseph Waight, the total number of shares acquired is forty five million, one hundred and ninety nine thousand, nine hundred and sixty one, broken down in two components with thirty four million, one hundred and seven thousand, one hundred and seventeen shares from Dunkeld International Investments Limited and eleven million, ninety two thousand, eight hundred and forty four shares from the BTL Employees Trust.  The tribunal has valued each share at five dollars and sixty five cents thus making the gross figure two hundred and fifty five point five million Belize dollars.  A part-payment was done in the sum of sixty five million dollars last September, leaving a balance of one hundred and ninety million dollars to be paid on the shares.  As it relates to the interest, the total is about three hundred and eighty eight million dollars and that does not factor in the legal costs and arbitration costs which would bring it to three hundred and ninety five million dollars.  Forty percent of that amount is to be paid in US dollars and the remaining sixty percent in Belize dollars.  Waight says there may be some slight adjustments made to the figures due to the currency exchange and other factors.