7 News Belize

GOB Settles BEL Compensation With BECOL
posted (August 31, 2015)

In mid-2011 – the Government of Belize took over BEL. They took it from the Canadian company Fortis – who was the majority shareholder at the time. At the time, the Fortis-managed BEL was insolvent, in other words, it had run out of cash, and could not pay its debts. The company said it needed higher rates, or it would be forced to implement rolling power outages. Government rejected that, and moved decisively to pass legislation and swooped in to take over the power company. Since then, BEL has been stabilized and earned record profits – while bringing down rates to a modern low. Sounds like a happy ending, but, one big part of the story was missing: Fortis had not been paid for its shares – and according to them Government owed them over 300 million Belize dollars. More than that, Fortis was challenging the takeover in court – and that case is at the Caribbean Court of Justice – where Fortis found common cause with the Ashcroft Alliance.

So, it was a ticking time bomb – either government would have to pay hundreds of millions of dollars – or it could lose the case, and be forced to give them back the company. Both prospects were grim, but things took a turn when former Fortis boss Stann Marshall retired and was replaced by Barry Perry. He didn't want hundreds of millions, and he didn't want the company back – he just wanted a fair settlement. Perry met with the Prime Minister in July and since then, things moved very quickly to a settlement – the details of which were announced this afternoon at a press conference at the Biltmore:…

Barry Perry - Chairman, Fortis Inc .

"The settlement that we will be announcing today is a significant event. One that will enable for us to continue participates positively in Belize."

Hon. Dean Barrow - Prime Minister

"I believe that the settlement, which will be taken to parliament on Wednesday; is good for Fortis and good for Belize. In essence the settlement is this. As compensation totality for GOB's original acquisition of all of Fortis' 70% shareholding in BEL; GOB will now pay to Fortis 35 million US dollars in cash, 70 million Belize dollars. And GOB gives back to Fortis 33 and a third shareholding interest in BEL. Government keeps the rest of the 70% that it had acquired and together with SSB; which has something like 26.9%, we will continue to own well in excess of the 51% mandated in the constitution."

Barry Perry - Chairman, Fortis Inc.

"Prime minister, I hope what we have done today will be the start of a long and peaceful relationship between Fortis and the government of Belize. Thank you very much."

With its 33.3 shareholding, Fortis can appoint three directors – but will not be involved in the day to day management of the company. Those Directors are Lyn Young, Kay Menzies, and a Fortis executive.

The government seems to have gotten off cheap on this one – since Fortis was originally asking for over 300 million dollars compensation, and that's before interest and damages. As the Prime Minister noted Government is paying 35 million US in cash and 33% in shares.

And where will government get the money? – That's what the press asked the Prime Minister today:…

Hon. Dean Barrow - Prime Minister

"The source of the funding is government money that it has in its account. It's 35 million US; you will know of course that the foreign exchange is no problem since our reserves now stand at a billion Belize dollars or 500 million US."

Jules Vasquez

"In June of 2011 when you all took the company over; now you are having to pay a dear cost all told in terms of equity and cash for a decision which had you let things lye, Fortis would be realizing the same profits that the state-run BEL or state majority control. BEL is realizing now because it is actually just a product of lower fuel prices; it's not that the wheel was reinvented."

Hon. Dean Barrow - Prime Minister

"That's one mother of a question. I don't know how you could say that the cost to Belize of the settlement is dear. That 35 million US for what would it be; 36 almost 37% percent of the shares on BEL that government now gets to keep is I believe less than half of the value Fortis had put on those shares at the time of acquisition. And certainly a huge discount on the share price now, if you were to calculate it in terms of the last year end audited financials. So I'm not going to sit here and argue with anyone who is wilfully blind. Government has succeeded in securing once and for all now, majority ownership of BEL."

Jules Vasquez

"Will the government recoup the compensation which is now the equivalent of its investment? Will the government recoup that over the long term?"

Hon. Dean Barrow - Prime Minister

"How do you put a price on the preservation of patrimony and nationalism; but if you insist, we have absolutely no doubt that in terms of the continued profitable operation of BEL and the dividends that government has already gotten and will continue to get now on the basis of its 37% shareholding; that the 70 million dollars will be very easily and rapidly recouped."

Government expects to pay Fortis the 35 million US dollars by Tuesday.

The settlement is a big deal for government and this was underscored by the fact that it held Cabinet today at the Biltmore before the press conference. Cabinet meeting in a hotel conference room? Now that's a first! And it's indicative of the seriousness with which the Barrow administration takes this settlement. But, all that anticipation, all that advance buzz – and it didn't even make the headlines in the news tonight! We asked why it's so important:

Jules Vasquez

"We know there was a cabinet meeting held here today; very unusual, the first. This is really a big deal for your administration but how in the public mind it may be seen as a very technically refined and sublimed move but it does not have any visceral tog. It is an Operatic Arias but people want dance to Punta. Explain if you can, why do you think it is really such a big deal when most people would say, alright well they pay it off, my light bill is still high."

Hon. Dean Barrow - Prime Minister

"I'm not sure that your premise is entirely correct when you say that the confirmation of the government and people's ownership of BEL; at a price is more and fair. I'm not sure you're right when you say that it will not strike any sort of responsive chord in the bosom of the Belizean people. I think it will."

"If we hadn't settled now and that judgement came down and the court said government of Belize you were wrong, give that company to Fortis; you'll look at it that way that would have produced a hell of a response. Hell of a negative response on the part of the public."

"If it doesn't pay any political dividends in the immediate term; history has somebody once famously said and to appropriate it and misquote it, will absolve us."

Of course, that history is still being written – when the government takes the bill for an act to settle the acquisition to the House of Representatives for a special meeting on Wednesday.

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