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#515708 - 07/02/16 04:21 AM Half-a-billion bucks for BTL!  
Joined: Oct 1999
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The saga surrounding the exorbitant cost of telecommunications liberalization in Belize—which has ballooned because of the tumultuous and litigious landscape that emerged after the Government of Belize moved in 2001 to end the telecommunications monopoly—still has some observers awed with disbelief. The country’s premier telecommunications provider, Belize Telemedia Limited (formerly Belize Telecommunications Limited) has endured privatization, liberalization, and a series of government-brokered deals and takeovers—and Belizeans are still counting the cost.

Seven years ago, when the Government of Belize took control of Belize Telemedia Limited from a group of companies controlled by British billionaire Lord Michael Ashcroft, Dunkeld, one of his Turks and Caicos companies, triggered foreign arbitration claiming between $300 million and $600 million.

The presiding arbitrator was Albert Jan van den Berg, who heard the matter along with the arbitrator appointed by the claimant: John Beechey, and the arbitrator appointed by or designated by Belize, Rodrigo Oreamuno Blanco, at the Permanent Court of Arbitration in the Hague in the Netherlands as a dispute arising under the Belize-United Kingdom Investment Treaty of 1982.

Allen & Overy, a law firm representing the Ashcroft group, has indicated that Barrow was the one who signed the exchange of notes for the said treaty back in 1985, when he was Minister of Foreign Affairs.

The tribunal this week ordered the Government to pay Dunkeld US$100,138,726, which it said was the value of its interest in BTL as at 25 August 2009. Of that amount, US$59,984,641—60% of the award—is attributed to the value of the Accommodation Agreement.

The Government also has to pay compensation to the BTL Employees Trust, and although the workers never controlled that company, Barrow said Wednesday that the workers should get a portion of the compensation paid to that trust. He told the press that the total compensation payable for the share value is BZ$255.6 million—not including interest.

The shock of this week’s revelation was somewhat mitigated by prior warnings that the decision would soon come. The news on Tuesday, June 28, was that the nationalization of Belize Telemedia Limited (BTL) back in 2009 had come at a grand total cost of nearly a half-a-billion dollars, although the history of the dispute—unresolved for more than 7 years—was fuzzy in many people’s minds.

Today, there were some questions that Belizeans want to have answered. First among them was, why did it have to come to this? The second was, how will the Government pay?

According to Prime Minister Dean Barrow, his government had moved to nationalize BTL back in August 2009 to put an end to battles between the Government and the Michael Ashcroft-controlled BTL.

The accommodation agreements also covered BTL’s acquisition of $19.2 million worth of assets, formerly owned by the companies affiliated with Glenn D. Godfrey, which the Said Musa administration persuaded BTL to acquire. (For more information, see our online post: http://amandala.com.bz/news/behind-the-accommodation-agreements/)

“Lord Michael Ashcroft is an extremely powerful man. His net worth may well be equal to Belize’s entire GDP. He is nobody to cross…, “ said Barrow.

In announcing the nationalization of BTL, Barrow had said: “There will thus be no more Telemedia awards against us; no more Telemedia court battles; no more debilitating waste of government’s energies and resources; and there will be no more suffering of this one man’s campaign to subjugate an entire nation to his will.”

The fact is, though, the litigation has still not ended. Instead, there have been even bigger awards against the Government of Belize, and as we speak, the Government of Belize is trying to fend off efforts by the Ashcroft group to have the United States enforce multiple arbitration awards against Belize. The tab is no longer tens of millions—it is now hundreds of millions.

With respect to this week’s arbitration ruling, Barrow has indicated that in his view, it was a win for his government and he has no regrets.

“Very simply, we believe we will have no difficulty, especially in view of the excess liquidity in the financial system; getting all the money locally by way of issue of government paper, bills and notes. And the 40% that has to be converted into US and send abroad will also be fairly comfortably covered by Central Bank reserves,” Barrow said.

Last year, the Government paid a partial settlement to the former owners of BTL of US$32.5 million (BZ$65 million), plus US$48.5 million to the British Caribbean Bank for the loan the Government of Belize took when it nationalized BTL. Originally, the loan was for US$22.5 million, but because of the loan, the bank held BTL’s primary assets, which the Government had to acquire to accomplish the full takeover of the company and its assets.

The arbitration panel has also awarded certain costs associated with the arbitration expenses to the claimant. The parties are to bear their own costs of legal representation, but the panel ordered that the Government pays certain costs to the claimants for proceedings before Belize’s courts. In his summary of the costs of the award, Waight said that legal costs amount to $7 million.

BTL’s shareholder equity, according to its audited financials, during the year that Government took control of the company was BZ$165.9 million. Its assets were valued at BZ$317 million. However, the foreign arbitration panel which handed down its decision this week fixed the company’s equity value at US$270.9 million (or BZ$541.8 million)—that’s including the concessions which the Musa administration gave to BTL, while under Ashcroft’s control, to which the tribunal attributed 60% of the award, which factored in both present and future benefits of what would apparently have been a highly favorable 30-year concession.

The Ashcroft group initially claimed US$298.70 million, or roughly BZ$600 million. Dunkeld’s assumption was that the Accommodation Agreement would be in effect until 2034, the duration of Telemedia’s renewed license plus two years. The agreement guaranteed the Ashcroft companies which held interest in BTL a 15% rate of return and when BTL did not meet those promised profits, the Government would compensate through tax set-offs. The agreement also involved restrictions on public access to Voice Over Internet Protocol (VoIP)—restrictions which were reversed in April 2013.

“I wish to make clear at the outset that I place blame for that accommodation agreement portion of the award; which is 60% of the total, I place blame for them squarely on the People’s United Party. The accommodation agreement portion of the award is not to go to those former shareholders; instead that money (less expenses) is to be paid by us in Belize Dollars and is to remain and be spent in Belize,” Barrow announced.

Today, Opposition Leader Johnny Briceño told the press that Barrow knew all along that Belizeans would be saddled with a half-a-billion bill but he resisted paying compensation until last September because of his ego, in his quest to win a third term in office. He said that the nationalization amounted to Government buying “pus eena bag…” since the company is valued far less than what Government now ends up paying for it.

Barrow noted that half of the award is payable within 10 business days: 60% of it in Belize currency and 40% in US currency. The second half is due within 12 months. He said that they will borrow funds from the local market by issue government paper, in the form of treasury bills and notes at a lower interest rate than their previous issue.

Furthermore, he told us that the Government is currently selling $60 million in utility shares: $55 million to the Social Security Board and another $5 million as a separate offering.
SSB chair Douglas Singh confirmed to Amandala that SSB will buy $15,000,000 shares in BTL and another $40,000,000 shares in Belize Electricity Limited (BEL). (BTL shares attract a much higher dividend than BEL shares.)

In wrapping up his statement on Wednesday, Barrow announced that, “Even after that there will still be a little more headroom for selling additional shares in BEL, and a lot more headroom for selling additional shares in BTL. We anticipate being able to raise another $75 to $100 million if we go that way, so that borrowing for the award will be greatly lessened as a result.”

It remains to be seen how many of those shares will actually remain as property of the Government of Belize after the transactions are concluded.

When the Government acquired BTL, it held a supermajority of roughly 95% of those shares. In 2010, it divested itself of some of those shares, at $5 a share, leaving it with a shareholding of 63.4%. By contrast, the Government was offering the former shareholders $1.46 a share.

Additionally, the Government’s 70% shareholding in BEL was last year reduced to 36.9% after it returned 33.3% of those shares to Fortis Inc. of Canada in a settlement agreement that saw the Government paying compensation of US$35 million. The planned purchase of more BEL shares by Social Security Board would see the board’s stake in BEL increase from its current shareholding of 26.9%.

Singh told Amandala that the board has already approved the purchases based on a recommendation from its investment committee to proceed, and they are now working out the final details with the Government, as they cannot pay more than the value that the SSB has set for the shares, based on the earnings per share. Government is selling the shares to pay compensation to the Ashcroft group.

Financial Secretary Joseph Waight said that Parliament has already given authority to proceed and the Central Bank will create an account for the Government to deposit the US currency it needs to pay the portion of the award due next week.

Barrow said that the former BTL shareholders were demanding over $10 per share as compensation, and since they could not agree, the matter had to be settled via litigation. He also said that the former owners were fighting to get back the company.

Five Ashcroft companies, BCB Holdings, Ecom Limited, Mercury Communications Limited, New Horizons Inc., and Thiermon Limited, all filed claims for BZ$10.23 per share, based on a valuation by PricewaterhouseCoopers LLP reported on 17 December 2010. The arbitration panel found that the value of Telemedia as of 25 August 2009 was BZ$5.6547 per share, of which BZ$3.3873 is attributed to the value of the Accommodation Agreement. That was one bitter pill in the award. Another was the interest awarded at 8.34% compounded quarterly. Financial Secretary said that the interest portion amounts to BZ$198 million.

Belize court records indicate that Waight had filed for the court to determine compensation after the parties were at loggerheads over the value of compensation. Seven years later, the PCA-based tribunal ruled in favor of the former owners, awarding them a substantial amount for the accommodation agreement which the Barrow administration had repudiated back in 2008. That decision by the Barrow administration not to accept those agreements which he said were given secretly by the Musa administration sparked a new wave of litigation, first resulting in a separate arbitration award against the Government handed down by the London Court of International Arbitration (LCIA).

As we write, Belize Social Development Limited (BSDL), the company to which the former shareholders assigned the award before nationalization, is trying to have that arbitration award of BZ$38 million enforced against Belize in the USA.

Barrow told the press Wednesday that he is certain that the Government will not have to pay that award; as the saying goes: “Only time will tell!”

Amandala

#515967 - 07/14/16 03:43 AM Re: Half-a-billion bucks for BTL! [Re: Marty]  
Joined: Oct 1999
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BTL Compensation Award Update

The Government of Belize (GOB) informs that a dispute has arisen between the Government and the Ashcroft Alliance over the recent BTL compensation award handed down by the Permanent Court of Arbitration.

GOB, after the most careful examination by a number of its experts, argues that the wrong rate of exchange was applied by the Arbitral Tribunal in arriving at its ultimate compensation figure. GOB also submits that the Tribunal's calculation of interest was mathematically incorrect. Both mistakes by the Tribunal prejudiced GOB and resulted overall in larger sums being awarded than were justified. GOB has 30 days from the date of the award to seek rectification, and its overseas lawyers have now prepared and are filing the relevant application.

For its part, the Ashcroft Alliance questions the currency split used by GOB last week in making the first half payment of the award. It will be recalled that the award was divided into two by the Tribunal, with 40% of the total representing the non-Accommodation Agreement portion and 60% representing the Accommodation Agreement portion. The latter, according to the Settlement Agreement, is payable in Belize dollars and can only be spent to fund projects in Belize for the benefit of the people of Belize. The 40% is payable in United States currency and belongs entirely to the Ashcroft Alliance as compensation for the acquisition of their BTL shares.

Thus, GOB last Wednesday paid half of that unrestricted 40% of the award in US dollars to the Alliance, and half of the Accommodation Agreement 60% portion of the award in Belize dollars in trust for the people of Belize. But the Ashcroft Alliance now contends that half of the total award, and not just the 40%, should be paid in US currency. Apart from the foreign exchange implications, such a position would also short the Belize dollar portion reserved for the people of Belize.

The Alliance has now applied to the Caribbean Court of Justice for an interpretation supporting its contention. But that is a contention which would utterly violate the Trust set up for the people of Belize with the Accommodation Agreement money, and significantly reduce the number of projects to be funded for their benefit.

GOB will therefore employ all its will and all its resources to resist and defeat this new perfidy that the Alliance is attempting to perpetrate.


#516026 - 07/16/16 06:00 AM Re: Half-a-billion bucks for BTL! [Re: Marty]  
Joined: Oct 1999
Posts: 54,050
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GOB raising funds to pay Ashcroft from treasury notes and bills

The Government of Belize is raising funds on the domestic market to finance the payment of the arbitration award amounting to nearly half-a-billion dollars to the Ashcroft group of companies, whose shares the Government of Belize assumed when it nationalized Belize Telemedia Limited (BTL) back in 2009. As we reported last week, the balance, after subtracting the $65 million paid as an initial installment last September, is roughly $395 million, and half of that is due by today, July 13, 2016.

The Government of Belize is making use of the increased liquidity in Belize’s financial system—but this would also translate to a marked increase in the public debt stock, from about 82% last year to about 92% by the time the payments are settled.

We asked Ervin Perez, Managing Director, Legacy Fund, for the current liquidity data. Citing the Central Bank’s Weekly Monetary Aggregates, Perez told us that as of June 15, 2016, the amount of excess liquidity (in terms of hard cash) in the system is $451,802,000, up about $81 million from the same time last year.

How will the offering of treasury bills and notes work? Financial Secretary Joseph Waight told Amandala that the Central Bank, the Government’s fiscal agent, will purchase the Government’s notes and bills in the first instance and then on-sell them to institutional investors via a bid process. Those could include the commercial banks and insurance companies.

The offering of treasury notes and bills, said Waight, is close to $200 million—$185 million in T-notes and a smaller portion in T-bills.

The difference is, the treasury notes have a fixed, longer term and they vary in maturity from 1 to 10 years. The interest rates also vary: 3% for the 1-year notes, 4% for the 5-year notes, 4.5% for the 7-year notes and 5.25% for the 10-year notes.

Waight said that these rates are reflective of the current interest rates on the market. The interest would be paid to note holders semi-annually, every 180 days.

The bills, on the other hand, mature in 90 days. They are sold to purchasers at a discount on the face value. For example, a bill for $100 could be sold at $98, for a gain of about 2%. These, Waight said, are mostly held by banks and it’s a way to manage their liquidity.

Amandala understands that the Belize Social Security Board, which had initially been asked by the Government to purchase $55 million worth of shares in BTL and Belize Electricity Limited (BEL), is considering purchasing some of those financial instruments from the Government. The share offering is being reconsidered, at least for the time being, according to Waight.

He told us that the Government has been getting a combined revenue stream of about $10 million a year, about $7 mil of it from BTL.

“The Government has taken the position not to proceed with any proposed sale of shares, but rather to retain its shares for itself and to therefore maintain the ownership of those shares and then be beneficiary of dividends or income, rather than sell the future stream of income,” Waight said.

Those receipts, Waight said, would help to meet commitments to holders of the treasury bills and notes.

Waight explained that Dunkeld International Investments Limited (which held 34 million shares in BTL at nationalization) is to receive two-thirds of the funds, while the remainder is to go to the BTL Employees Trust, another Ashcroft-controlled entity which held roughly 11 million shares at nationalization.

Dunkeld is the investment arm of Hayward Charitable Trust—the entity to which the Government would propose projects for Belize in line with the settlement agreement provision, which stipulates that the portion of the compensation attributed to the accommodation agreement (roughly 60%) would be payable in Belize dollars and spent on projects in Belize.

“Their consent would not be unreasonably withheld,” Waight said.

On a final note, after the Government pays the second portion of the arbitration award in 12 months, Belize’s debt to GDP ratio will be pushed to a high of 91-92%, according to figures provided by the Financial Secretary. This week’s payment, which will be met from domestic borrowing via the offering of treasury notes and bills, will increase the debt burden to about 86%.

This year’s report of the International Monetary Fund on Belize said that Belize’s public debt stock had “climbed to 82 percent of GDP after a one-off payment related to a settlement of a loan to one of the nationalized companies [speaking of the loan from the British Caribbean Bank to BTL which the Government had also acquired at nationalization], an increase in public sector wages and transfers and a large overrun in capital expenditure.”

Amandala


#517687 - 09/20/16 12:59 PM Re: Half-a-billion bucks for BTL! [Re: Marty]  
Joined: Oct 1999
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This morning the Caribbean Court of Justice advised the Government of Belize & the previous owners of BTL to work out a settlement of the arbitration award outside of court.
We'll have the reaction of the legal counsels for both parties tonight in our newscast.

News 5

#517909 - 09/29/16 12:31 PM Re: Half-a-billion bucks for BTL! [Re: Marty]  
Joined: Oct 1999
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CCJ rules against GOB

Government of Belize Expresses Disappointment over CCJ Decision

The Government of Belize (GOB) expresses its disappointment at the decision of the Caribbean Court of Justice (CCJ) this morning on the interpretation of the BTL Settlement Agreement.

GOB does not agree with the ruling of the Court but must accept it. It is important to point out that the overall quantum of the Arbitral Award has not been increased or in any wise altered; however GOB now has to pay 10% more of that award in US currency - that is 50% rather than 40% of the total award.

The CCJ has said that it is prepared to give GOB time to pay on an installment basis. GOB is now determining, together with the Central Bank, the best case scenario to avoid any withdrawal of too large an amount at any one time from the Central Bank Foreign Reserves. Thereafter GOB will put that scenario to the CCJ for approval. On that basis, GOB is comfortable that the ruling will cause no shock to Belize's foreign exchange position.



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