June 21 (Bloomberg) -- Belize's credit rating may be cut by Standard & Poor's after the government moved to seize control of the country's sole electricity provider.
S&P, which rates Belize's foreign and local debt B, five levels below investment grade, said in a statement that it cut the outlook on the credit to negative as the government sought to take over majority ownership of Belize Electricity Ltd. from Canadian utility company Fortis Inc. The government's expropriation is designed to ensure the continuity of electricity to the Central American country after Belize Electricity's management reported "difficulties in meeting financial obligations," S&P said.
"This transaction has the potential to increase the government's already high debt level substantially and weaken its debt-servicing capacity," S&P said in the statement.
Fortis said it was told of Belize's seizure today. Fortis holds a 70 percent stake in BEL, which represents less than 2 percent of the the St. John's, Newfoundland-based company's total assets of C$12.9 billion ($13.3 billion) as of March 31, 2011, the company said.
A message left for a press official at Fortis seeking additional comment after normal business hours wasn't returned.
The seizure stemmed from a dispute over a requested rate increase in 2008, the government of Belize said in an e-mailed statement.
The takeover order calls for compensation to be made to shareholders at "fair value,'' said Joseph Waight, financial secretary of the Belize Ministry of Finance, in a telephone interview.
San Francisco Chronicle