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GOB extends BSI $10M loan #417530
10/01/11 08:08 AM
10/01/11 08:08 AM
Joined: Oct 1999
Posts: 80,387
oregon, spr
Marty Offline OP

Marty  Offline OP

BSI CEO Joey Montalvo thanks Prime Minister Dean Barrow (extreme right) for extending the term of the $10 million loan.

The Government of Belize has agreed to give The Belize Sugar Industry Limited (BSI) a one-year grace period before the company has to begin repaying the $10 million loan that it made to get the crop started last December.

To this end, Prime Minister Dean Barrow and Deputy Prime Minister Hon. Gaspar Vega met with BSI Chief Executive, Officer; Belize Sugar Industry Control Board Chairman, Hugo Patt; and Belize Cane Farmers Association’s President, Alfredo Ortega, to sign an agreement extending the term of the loan.

The agreement was signed at the Coastal Zone Management Authority Building in Belize City on Wednesday, September 28.

BSI has also been granted a one-year extension on its US$20 million loan from the International Netherlands Group (ING) which was due on September 30, 2011, but this was contingent on the government holding off on collecting its $10 million.

ING’s concession is also contingent on the cane farmers maintaining the cane quality and planned delivery schedule that was achieved this past crop, which in terms of the tonnes of cane to tonnes of sugar (TCTS) ratio of 8.5 was one of the best on record.

At the moment BSI still does not have the money to repay ING’s $20 million loan, which becomes due on September 2012, but the company now has a year in which to find a strategic investor who can infuse the company with the required capital to expand the factory to handle the increased sugar cane production, which the Belize Sugar Cane Farmers Association has promised to deliver..

The long term target is to grind 1.5 million tones of cane per year, and if the T.C.T.S. ratio of 8.5 achieved this year can be maintained, that would mean BSI would be producing some 176,470 tonnes of sugar per year.

At present the best offer on the table is the $90 million proposal from Banco Atlantida of Honduras, but the B.S.C.F.A. has thrown its hat into the ring by announcing on August 29 that it is seeking financing to buy a controlling interest in B.S.I., or at least to present a viable alternative to selling a controlling interest to the Atlantida group, so that ownership of the industry remains in Belizean hands.

For its part B.S.C.F.A. President Alfredo Ortega said the farmers have already invested $1 million in a sugar cane replanting program and another $3 million in financing has been made available to cane farmers from the Development Finance Corporation to help them improve their cane fields.

The farmers have also received some $2 million worth of fertilizer from the Association through the European Union’s Fair Trade incentive program, to be applied to their cane fields to help improve production for the upcoming crop.

BSI also owes US$10 million to the First Caribbean Investment Bank. The Banco Atlantida proposal had promised not only US$20 million to pay off the ING debt, but another US$20 million for expansion of the factory, US$25 million to buy some 20,000 acres of land for the company to plant more cane, US$20 million to be made available in soft loans at favorable terms to cane farmers and US$5 million to take care of operation start-up costs for the upcoming crop.

If the deal were to go through, the Atlantida Group would acquire at least a 51% controlling interest in BSI through the issuing of new shares, which would mean the dilution of the 81.29% shares presently owned by the BSI Employees Holdings Trust.

As part of their due diligence, the Atlantida group representatives have already met with representatives of the Belize Sugar Workers Union, who are the beneficiaries of the trust. The union representatives conceded that a smaller share of a bigger pie was better than a large share of no pie; as this is what would happen if the ING bank were to foreclose on BSI.

The union also had concerns about ensuring the long-term job security for all employees; the long term prosperity of the entire sugar industry and the further expansion of the industry.

They received assurances from the Atlantida Group that the workers’ jobs would be secure. The Atlantida proposal also took into account the payment of outstanding dividends to the BEH group

The bank also agreed to allow the ratio of 65% to farmers – 35% to BSI for splitting the profits after all the sugar is sold at the end of the crop to remain as the system of payment to farmers.

The Reporter

Re: GOB extends BSI $10M loan [Re: Marty] #417533
10/01/11 08:16 AM
10/01/11 08:16 AM
Joined: Oct 1999
Posts: 80,387
oregon, spr
Marty Offline OP

Marty  Offline OP
Why is Atlantic Bank more worthy of BSI ownership than the cane farmers?

Dear Editor,

As we become 30 years old as an Independent nation, it behooves us to reflect upon our journey to assess how far we have come and if we are going in the right direction. One of the pressing urgent issues that faces us is the future of the sugar industry of Belize. And amidst all the facts, misleading statements and lies that have been pervading the discussion, we must focus clearly and decide firmly on what is best for the development of Belize and Belizeans.

In November of 2010, the management of Belize Sugar Industries Limited (BSI) admitted that they were in a financial crisis and that they did not have finances to pay the third payment that was due the cane farmers, and neither did they have the finances necessary to begin the 2010/2011 cane crop operations. GOB lent BSI 10 million dollars and Tate and Lyle lent BSI another 10 million dollars.

Later, through the media, the Belizean public learnt that the Atlantic Bank group (AB) was interested in replacing ING bank as a main lender to BSI. Even though the Prime Minister had mentioned in an interview in February 2011 that AB did not only want to be a lender, but also wanted to participate in the ownership of BSI, the managers of BSI subsequently refuted such statement, in keeping with their position that the BSI managers were only seeking a lender to refinance their most urgent short-term loans. However, as time went by, in later interviews, the BSI managers began alluding to their quest for an investor.

As a consequence of BSI’s management’s changing their position from looking for a replacement lender to seeking a majority investor, the cane farmers at the General Assemblies of the Belize Cane Farmers Association (BCFA) of the 12th of June and again on 14th of August, 2011, resoundingly and unanimously passed and approved a resolution that the farmers want to be the majority owner of BSI, and they mandated the leadership of the BCFA to take all steps necessary to ensure such majority ownership, so that the sugar industry remains in the control and ownership of Belizeans with the Belizean farmers and BSI factory workers actively sharing and participating in the ownership and management of BSI.

On the 4th of July, the leadership of the BCFA received a draft proposal of AB’s offer which included that, upon paying BSI’s loan with ING Bank of US$20 million, AB would obtain 51% ownership of BSI and would engage in subsequent capital injections until AB obtains 75% of the ownership of BSI so as to achieve total effective control, mainly through a dilution of the shares of the current owners, of whom the BSI workers are the largest shareholder with 81.29%. In other words, the 81.29% of the BSI workers’ shares and ownership would be diluted firstly to about 40% and then subsequently to about 20%. This is so because two of the many conditions of AB are that AB can inject any amount of capital in BSI on one hand, and that the current shareholders will be refrained from exercising their stock right to purchase future share issues, on the other hand. In other words, AB would gain ownership and control of all BSI, including Belcogen and all their other lands and properties for only US$20 million.

On the 26th of August, the farmers received a letter of interest from the Sterling Group for a US$35 million investment. Then on the 31st of August, 2011, the Mexican capital arrangers visited Belize, the farmers representatives, the BSI workers, several government ministers and the engineering consultants hired by the farmers, and they confirmed that they have secured US$42.5 million through American Funds, which will be more than enough to pay off the pressing ING loan and to begin the 2011/2012 cane crop operations.

YET, the management of BSI continues to snub the farmers and to ridicule the farmers’ purchase offer. Why? Are the farmers not worthy and dignified to share the ownership of BSI along with the workers of BSI as Belizeans? Or do the BSI managers hold some prejudice against the farmers – whether racial, social or economic? Why is BSI management supporting the Honduran proposal without any substantial or justifiable reasoning? What is it that makes the Honduran Atlantic Bank group more worthy of ownership than the Belizean workers and farmers that have invested, toiled and laboured in this industry for over 50 years, in good times and in bad? Does the management of BSI expect the intelligent people of Belize to swallow the fallacy that because AB is a bank they have will have an unending source of money? Does the management of BSI expect the intelligent people of Belize to swallow the fallacy that because AB is a bank they will manage well and never go bankrupt? Why is it that while AB has admitted to syndicated financing, they have mentioned only one financial group – the Caribbean Development Bank- from where they will get US$20 million which, ironically, will be supported by a Government of Belize sovereign guarantee? Where will the rest of their money come from? Why is it that the managing director of BSI has been stating that only AB has submitted a concrete proposal, when on the 14th of September Mr. Earl Lopez of the BSI Employees Trust stated in an interview that the AB people admitted to them that they are still doing their due diligence? So is there a concrete proposal or is the due diligence still underway? Who is lying - BSI management or the Honduran AB group?

My fellow Belizeans, we must indeed reflect on the path we will take as a nation. While 40 years ago George Price succeeded in making Tate and Lyle divest itself of its lands so that the lands go back into the hands of the Belizean cane farmers, today we face the danger that if the AB proposal succeeds, then we will revert to over 40 years ago where one Central American latifundista group will control most of the lands, most of the production, all of the operations and all of the marketing and sales; with us Belizeans going backwards from being part owners of the industry to enslaved employees of our foreign masters.

Belizeans Reflect!!! Belizeans Unite!!!

Ramon “Monchi” Cervantes
A Cane Farmer
Orange Walk Town
September 25, 2011


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