In reports to shareholders in advance of its 5th Annual General Meeting slated for Thursday, December 15, 2011, Belize Telemedia Limited (BTL) said that it is suing ex-board members and companies associated with the previous owners, the Ashcroft group of companies, “for a total of BZ$21 million.”
The claim, BTL said, is “against the pre-2009 Board of Directors and associated companies of the previous owners for relief for loss and damage to” BTL and its subsidiaries because “of their unlawful and wrongful acts in connection with the disposal of the [BTL] Group’s [then] subsidiary, Great Belize Productions Limited.”
Back in April, our newspaper reported that BTL had filed suit against 11 defendants, including former BTL chairman Keith Arnold and the parent company of Channel 5 – Great Belize Productions, because of the detachment of Katalyst Development Limited, owner of Great Belize Productions, from BTL just before the nationalization of BTL in August 2009.
For its part, Channel 5 has called the lawsuit “a legal attack.”
BTL is also suing, in the claim (#145 of 2011), former director Philip Zuniga, as well as Ashcroft related companies - Shire Holdings Limited, Rocky Reef Ventures Limited, Ibis Investments Limited, Scarlet Ventures Limited, Seascape Limited, Channel Overseas Investment Limited, Thames Ventures Limited, Great Belize Productions and Katalyst Development Limited.
There is more litigation involving BTL and the Ashcroft group. BTL reports that, “On 4th of June 2011, [BTL] and the Government of Belize filed a claim in the Supreme Court of Belize against the British Caribbean Bank Limited [BCB] seeking declarations that the US$22.5 million loan is unlawful, null and void and that the Company has no legal obligation to pay.”
“In July 2007, Belize Telemedia Limited entered into a US$22.5 million loan arrangement with the British Caribbean Bank Limited, formerly the Belize Bank (Turks & Caicos) Ltd. (the Bank) for the purpose of acquisition of its own shares,” BTL explains in its 2011 financials.
“The loan was drawn down on the same day that it was obtained and was to be repaid in 4 years. The loan was secured by a mortgage debenture made by Telemedia over all of the properties and assets owned by the Company and guarantees from each of Telemedia’s subsidiaries.”
When the Government of Belize nationalized BTL, it took over the debenture, as well as the security over BTL’s assets.
The disputed loan has been under fierce dispute since 2009, with BCB insisting that the loan is valid and due to be paid.
BTL’s directors who took over the reins of the company in August 2009, after the nationalization, say that the loan was contrary to Belizean law, which forbids such a transaction for the purchase of the company’s own shares.
The 2011 nationalization is being challenged in court and may be challenged before the Caribbean Court of Justice (CCJ).
What happens if the court finds the loan valid, or the nationalization unconstitutional or illegal?
BTL says that, “...in the event (remote as it may seem to the Board) that Belize’s highest Appellate Court rules otherwise [that the loan was valid] and the Government of Belize becomes ultimately liable for the US$22.5 million, then the [BTL] Group is prepared to take on the liability for the loan and settle it by sourcing a long-term loan.”
In its 2010-2011 financials, BTL does not include the BCB loan.
In fact, the company reports its liabilities at just $51 million.
BTL said: “...the US$22.5 million loan (BZ$45 million) reported in the [BTL] Group financials of March 2009 and March 2010 was removed from the financial records of the Group. The Group has advised the Government of Belize, in writing, of the facts reported above and of its decision to de-recognize the loan.”