7 News Belize

GOB Comes Up With Multi Million $$ Solution to Standoff
posted (February 17, 2014)
On Friday, we told you about the very serious talks in the citrus industry. The background was the ongoing cash flow crisis at Citrus Products of Belize Limited. That's the company that buys the citrus products from the farmers. But its accounts have been frozen because its board of directors is deadlocked on finding a new auditor - and the bank First Caribbean wouldn't release any money until it gets audited figures. With that the industry wasn't paying farmers, and they had stopped delivering - bringing one of the country's three major agro industries to a grinding halt. The fallout in terms of losses could be huge - so government was pressed to make a dramatic and expensive intervention. The plan for that was outlined this morning at a Prime Ministerial press conference. 7News was there:..

Jules Vasquez reporting
Government says a crisis at CPBL forced them to get involved:

Hon. Dean Barrow, Prime Minister
"When late last week I heard from the management of the factory that the factory was about to stop accepting fruit, the factory was about in effect to close. The paste of the negotiations I have been seeking to conduct with the various parties naturally quicken, became absolutely urgent."

Denzil Jenkins, CGA Director
"We the citrus industry as it were a ship at sea maybe in the middle of the Atlantic in a category 5 hurricane and there is a fire on deck. There needs to be right now most urgent attention."

And that urgent attention is in the form of a 15 million dollar bailout for Citrus Products of Belize Limited - the company that buys the fruit, with its bank First Caribbean International.

Hon. Dean Barrow, Prime Minister
"What we are talking about is a situation in which public money is being used to facilitate a set of arrangements that will see CPBL given the oxygen to continue functioning in the interest of the growers and the interest of profit making for all concern under a new regime that will hopefully avoid the deadlock that has hither to confounded the operation of CPBL."

First the Bank will provide 2 million dollars to CPBL in the form of working capital:

Hon. Dean Barrow, Prime Minister
"The proposal Is that FCIB will advance within the limits of their overall facility with CPBL the immediate working capital funds necessary to get us out of the pickle that we're in, in terms of the inability of the factory to pay for fruit."

And once the factory is back on its feet, government will provide bridge financing to buy out the 6.5 million US dollar loan CPBL has with the first Caribbean bank. Social Security will then - pending board approval - take up that loan - basically taking the place of first Caribbean.

But the Citrus Growers Association also owes Social Security another 9 million dollars - which they are not current with:

Doug Singh
"Now CGA I think is very solid. CGA own currently 51% of a company that has a netbook value of over 92 million dollars. The fact that it's not liquid doesn't mean that it doesn't have inability to pay at some point in time."

But, right now in exchange for that debt, Social Security will get 10% of the CGA's share-holding in CPBL.

Hon. Dean Barrow, Prime Minister
"What on earth can be wrong with CGA saying listen, we don't want to be any continuing burden on the tax payers, we will give you valuable collateral, this 10% of our shareholding in return for the liquidation of the debt. I believe in the viability of this industry going forward, but this is a one hundred year old industry that had stood the test of time. If government is not going to believe in the industry, any government, then something has to be wrong with that government."

But there's one thing standing in the way of that: minority shareholder Banks Holdings and their veto power that they still have over the board's decisions. Now, there will be three new Directors, one from Heritage Bank, another from Social Security and one from Government. If things still don't work out, Government is waving a very big stick:

Hon. Dean Barrow, Prime Minister
"Any continued deadlock after we've given this thing a mighty go would then have to result in GOB/SSB hopefully with the concurrence of Heritage saying fine, we will take this thing completely out of the hands of the shareholders, we will trigger our powers under the security instruments and we will put the company into receivership. Receivers would then be oblige to operate in the interest of all concern and certainly would not be subject to any kind of veto power under any investment agreement. Really, I need to stress that it is my sense that all parties are determined to make the new configuration, to make this new dispensation work."

A dire strategy but one that has the enthusiastic support of key players in the industry.

Today we saw bitter opponents from the CGA Denzil Jenkins and William Bowman sitting at the same table and even shaking hands:

Anthony Chanona, Past Chairman - CGA
"History must record when it is read that at this time of crisis and at this juncture in the saga of this crisis that it was the government of the Honorable Prime Minister and a UDP government that stepped in and put us on a footing forward - it's up to us now. So I want to thank you for that from where I stand on the political divide."

"If banks holding should choose not to play on a field that has certainly great potential to move us forward at a time of high citrus prices and at a time of great opportunity then PM this citrus industry will support you to do all that is necessary to take banks out of the picture."

Hon. Dean Barrow, Prime Minister
"We all know that there is a desire, CGA would say an intention, and for them to purchase the banks holdings' limited shareholding. Now that may well be a consummation devoutly to be wished and they had approached me for government to assist with the purchase price. I absolutely and flatly refused."

And so while the PM balked at that one - he wasn't so hardline on the removal of polarizing figure Henry Canton:

Hon. Dean Barrow, Prime Minister
"I would say though that from my point of view if we are talking about a fresh start certain consequences inevitably ought to flow from that."

We spoke with Canton today but he told us he had no comment at this time.

The only group absent from today's press conference was a critical one, Banks Holdings - which owns about 47% of the company's shares. The Group's Chief Executive Officer Anthony King flew in today and this afternoon at 2:00 went to a meeting with the Prime Minister. The Prime Minister flew out of the country after that - but King will stay on for a meeting tomorrow in the Cabinet Room in Belmopan. That session will be chaired by the Deputy Prime Minister Gaspar Vega who is also Minister of Agriculture.

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