|BSCFA Chairman Alfredo Ortega
|Consultant David Gibson
The Belize Sugar Cane Farmers Association has announced its intention to purchase a controlling interest in the Belize Sugar Industries in a press release on Monday, August 29.
But BSI Chief Executive Officer Joey Montalvo told The Reporter that Banco Atlantida is proceeding on schedule with its due diligence assessment of BSI, and he viewed the cane farmers’ offer as ludicrous.
The BSCFA release said they have informed Prime Minister Dean Barrow of its intention to put together a workable plan to keep the industry in Belizean hands and expand ownership of BSI to include the 6,000 cane farmers of Corozal and Orange Walk districts.
The BSCFA Committee of Management has been working toward this goal ever since they were given a mandate by a resolution passed at the General Assembly meeting on June 12 this year.
The farmers had another emergency meeting on August 14, at which the members of the association passed a resolution to hire a Technical Advisory and Negotiating Team to do a preliminary study of what the farmers would need to be able to acquire majority shares and ownership of BSI and Belcogen, “without prejudice to the processes of the Grupo Atlantida proposal now underway.”
This team is led by consultant David Gibson, who has sat on the Sugar Industry Advisory Board for a number of years, Giovanni Diaz as the engineering and co-generation consultant, BSCFA Chief Executive Officer Oscar Alonzo who is also an economist, and a financial specialist - Manuel Herrera, who would develop the proposal to be put to the BSI management.
BSI’s CEO Montalvo says the farmers’ proposal is really a pipe dream and out of synch with reality, as both BSI management and the majority shareholder, BSI Employees Holdings Trust, would first have to agree to sell shares to the farmers.
Aside from the 81.29% shares, which the BEH Trust owns, the Government of Belize owns 8.71% of BSI and Tate & Lyle, through its subsidiary, Booker Tate, owns the remaining 10%.
Cane farmers do not have the proven track record of successful cane deliveries, meaning they will not be able to meet the loan payments, even if they were to obtain financing, Montalvo suggests
Cane farmers, on the other hand, take courage from this year’s performance when they achieved the amazing record ratio of 8.5 tonnes cane to make a tonne of sugar (T.C.T.S.)
They did this by finally agreeing to implement a system of cane delivery by appointment, which the BSI management had tried unsuccessfully for years to get them to do.
It was only last year when Government had to advance BSI $10 million to make the final third payment to farmers that the farmers finally appreciated that the industry had its back to the wall and agreed to delivery by appointment.
But while the factory produced 98,488 tones of sugar from 843,786 tonnes of cane delivered this year, sugar production over the past five years has averaged only 90,869 tonnes per year, with the factory grinding more cane and with sugar ratios bordering on 10 Tcts.
Poor cane quality continued to plague the factory, with some truck-loads testing to a ratio of 16Tstc. These had to be turned away.
In 1985, the last year that the Libertad Sugar Factory also operated, BSI produced 102,000 tonnes of sugar. From 1986 to 1994, during the 10 year period when the BEH Trust was putting its earnings towards paying Tate & Lyle for the 81.21 % shares, the factory produced on average 96,300 tones of sugar per year.
Yet from 1996 to 2006, the factory produced on average 112,250 tonnes per year, showing the farmers had delivered close to or more than a million tonnes of cane.
Belcogen was designed on the premise of the factory grinding 1.5 million tonnes of cane, but even with the $30 million that the farmers have earned over the past six years through the European Commission’s Fair Trade program the farmers have not come close to meeting this target.
BSCFA Chairman Alfredo Ortega travelled to Panama this week in search of financing, but the Reporter has been unable to contact him since his return to find out how successful his efforts were.
The release on Monday declared that the Association has met various interested parties from Chicago, Mexico City and Panama to find a way to pay the US$20 million owed to the International Netherlands Group (ING) and the US$10 Million which BSI owes the first Caribbean Investment Bank.
The release said the Association will obtain syndicated financing, and that legal counsel for the financing group would be arriving this week to do due diligence
As the Directors of the BEH Trust stated in a press release, they have already agreed to Banco Atlantida’s proposal, even though it means a dilution of their shares, because the Trust does not have the investment capital that BSI needs to begin next year’s crop, or to pay off the $20 million ING debt. They have the same priorities which existed when the Trust was established in 1995: to ensure the long term job security for all employees; long term prosperity of the entire sugar industry and further expansion of the industry.
They also look forward to the payment of outstanding dividends, which BSI has been unable to pay for the past seven years.