Last Friday, the government sought and got the House approval to guarantee a loan of sixteen million dollars with Heritage Bank on behalf of Telemedia. It went through ALL its three stages. As you know, government owns majority shares of seventy percent in Telemedia, but there are many other shareholders, which means that Telemedia is not a state owned company. The prime minister said the loan is for upgrades.
“The majority of issued shares in Telemedia are held by the Government of Belize for the people of Belize and whereas Telemedia is desirous of borrowing the sum of eight million U.S. from the Heritage Bank Limited to assist in the financing of capital expenditure, in relations to system upgrades and expansion projects to introduce 4G service to Belize and whereas the bank is prepared to offer the loan to Telemedia under certain terms and conditions which include the provision of a sovereign guarantee by the Government of Belize supported by a resolution of the House of Representative. And whereas the guarantee will remain in effect until Telemedia is able to provide alternative security that is acceptable to the bank. And whereas the main terms and conditions of the loan offered by the bank is as follows: borrower, Belize Telemedia Limited; lender, Heritage Bank Limited; loan principal amount, eight million U.S. dollars; loan type, non-revolving loan facility available by way of promissory note; loan term, eighty-four months or seven years; purpose, to assist with capital expenditure in relation to system upgrades and expansion projects; interest margins, seven point five percent per annum (variable interest rates); arrangement fee, one percent of the facility payable upon acceptance of the offer; annual renewal fee of zero point two-five percent of the outstanding principal balance; repayment, repayment of the facility will be over a period of eighty-four months or seven years and for the first six months, interest only is payable in arrears on the first day of every month. Thereafter, repayment will be amortized over the remaining seventy-eight months with monthly blended payments of U.S. one hundred and thirty-five thousand eight forty-five [and] ninety-six [cents] being made to principal and interest until the loan is paid in full.”
It is highly unusual for the government to guarantee loans to the private sector. Another instance in the not too distant past when a guarantee was provided, was for the then United Health Services; it was vehemently attacked by the current government and in fact ended in the courts. But now the tables have turned and the government is doing what it had condemned the previous administration for doing. But there is another issue that is even more troublesome. There are a slew of cases before the courts that involve Telemedia following its re-nationalization in 2011. The Caribbean Court of Justice has already put the brakes on the sale of shares pending the outcome of the legal challenge on the constitutionality of the acquisition before that court. If the CCJ would reaffirm that government’s takeover was null and void as the Court of Appeal has done, then it could put millions of taxpayers’ dollars at risk because the government would still be bound to the bank as guarantor even if it no longer controlled Telemedia. At its last annual general meeting in December, Telemedia announced it has made fifteen millions dollars in profits.