How will BTL repay GOB for BCB loan?

vlcsnap-2015-10-01-10h48m47s46And while BTL re-positions itself to take on new challenges, the company is struggling with the millstone of the British Caribbean Bank loan debt which Government acquired along with the assets of the company in 2009 and 2011. Originally BZ$45 million, a studied ignorance of the loan which the company contends was illegally made has ballooned the payment to more than twice that amount, approximately BZ$97 million. With Government having settled with BCB, it has proposed a novel way of recouping its costs from its state-owned company. Board Chair Net Vasquez reported to shareholders.

Nestor Vasquez, Chairman, BTL: Now that the loan has been paid to British Caribbean Bank by the government. It is the government with whom BTL must now negotiate this long term loan. The details are not yet finalized but the prime minister has informed us that BTL vlcsnap-2015-10-01-10h48m51s84will have to service treasure notes in the amount of 48million dollars. That $48 million is Belize dollars that we will service treasury notes, which I understand to mean favorable terms allowing BTL a legally authorized period of delay for the repayment of the entire amount. You see with treasury notes, you pay only the interest on the treasury note until the note matures then you need to pay the principal. Many times those notes are rolled over and you continue to pay only the interest. In the meantime, I’m sure this board will have the prudence to pass a resolution to see that you have a sinking fund. your money in the bank, placed in a bank to earn interest, and that interest that is earned will no doubt reduce the interest that you paying on the treasury note.

Treasury notes typically provide low rates of interest and can be rolled over as needed. Later, Anwar Barrow made a startling revelation: Government is not – at least, not immediately – seeking the entire payment.

Anwar Barrow, Chairman Exc. Committee BTL: The government of Belize has said to us that we need to service $48 million out of the vlcsnap-2015-10-01-11h31m43s200$97 million that is what they have said as of this point that is your bill and that is what you need to service. the rest of it, the balance is in an indefinite moratorium. So right now we have to look at the $48 million and how we are going to service it. With the current financing structure that is being proposed, the shareholders, you the shareholders are actually in a better position than you would have been had we had to service that $45million loan whether under the former owner or under the government, and I’d like to explain why. When the company was taken over in 2009 as Mr. Vazquez said, the loan was at $45 million. The interest payment on the loan, the terms of the loan was at 12%. They had expected the former owners had said that they would be able to pay it in four years. Two years grace, just interests and two years principal and interest. We know that that is not practical and that is impossible because the final two years would have amounted to some 25 million in payment per annum, which is not sustainable.

And according to Vasquez, the former owners left the loan in default after extending it beyond its original repayment period.

Nestor Vasquez, Chairman BTL: Even if they had paid it back, it would have been over 70 million with the interest, with the years. because when they asked for and additional grace period. That made the loan in five years instead of four years because we have a record that they couldn’t pay it when it was due to be paid after the two years grace period. So it would’ve taken them maybe seven years. And that means with the interest on the principle it would’ve been at least $70million on their own. If nobody had kept it. And besides that, what we’re going to pay is going to be less in interest.

Vasquez also charges that with the monopoly held by the Ashcroft Group and the Accomodation Agreement, BTL’s hands would be tied for the foreseeable future. But the questions remain. At the time of takeover would it have been easier to pay then because the other course of action led to the company taking a risk and losing? Wouldn’t it be true to say that BTL is worth next to nothing because of the liabilities on its balancevlcsnap-2015-10-01-11h31m37s135 sheet? And why did Government agree to sell shares to SSB, Belizeans, etc., at a more inflated price than they were originally worth at nationalization? These questions we had intended to put to either Vasquez or Barrow, but neither man was willing to grant an interview after the close of the AGM. In response to a question from Christopher Coye during the meeting, Vasquez said they awaited the auditors’ determination of how to treat the facility on BTL’s books.

About the Author