7 News Belize

BML's Lawyer On Municipal Bond: Let The Buyer Beware
posted (November 23, 2012)
Yesterday we told you all about the launch of the prospectus for the Municipal Development Bond.

But one thing our story didn't cover was what the accountants might call a "contingency" - and it's a mighty big one!

It has to do with a pending 2.4 million dollar judgment against the City Council. The judgment is in favour of Belize Maintenance Limited, or BML - which is currently contracted to clean the city - and was granted by the court in 2009, but has still not been paid. The prospectus does disclose the judgment as exceeding two million dollars but says that it is under renegotiation. From there, the prospectus suggests that if the re-negotiation is successful, the judgment would be written off.

Here's how the mayor explained it yesterday:..

Darrell Bradley - Mayor, Belize City Council
"One of our views would be that we just ride out the contract. How it worded in the prospectus and in the summary that we circulated is that it's an alternative but what we want to emphasize is that we have to make up those figures. We can even make up those figures by the re-negotiation or we can make up those figures by riding out the contract. There is no decision that has been taken yet and there is no decision that's contain in the prospectus."

Jules Vasquez
"However, it's a significant contingency going forward because if there is an issue of a 2 million dollars judgment pending as well."

Darrell Bradley - Mayor, Belize City Council
"You know the reality of the council. You know the reality and the financials which are in there contain payables. It's a significant amount of payables. A lot of those payables are due to the two significant judgments that we have and to significant areas that we owe in terms of taxes and what we are doing in terms of all of those payables - we actually have strategies that we would ne working on in terms of getting down those payables to manageable limits and we also see how we will deal with our other creditors. The point that I want to make is that what the prospectus does is it presents a truthful picture of the financial condition of the council and the options that we have going forward to ensure that we are able to meet all our projections."

But not so fast. Today attorney for BML Lisa Shoman told us that she has been instructed by her letter to write an advisory letter to all prospective buyers telling them basically, let the buyer beware!

She says that this is a court-ordered debt that the city council refuses to honour. And she says it suggests that, similarly, the Council will not honour debt owing to bondholders.

BML's contract with the City Council runs until 2015 at a clip of 80 thousand dollars a week. The prospectus says they hope to renegotiate that down to 55 thousand dollars a week - or, alternately, just see the contract out to its completion in 2015 and get a better deal then.

The owner of BML Lawrence Ellis has indicated to us that he could not run his operation on fifty-five thousand dollars a week - which is the proposed weekly re-negotiated payment from City Hall.

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