Luke runs out of money?

Posted By: Marty

Luke runs out of money? - 12/01/10 03:00 PM

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The Belize Bank has moved to foreclose on one of Belize’s most prominent businessmen, Luke Espat, also an executive and financier of the Opposition People’s United Party (PUP), with published newspaper notices that it will sell off collateral, including hundreds of acres of land and associated buildings belonging to the businessman and some of his affiliated companies.

Amandala sources say that over the weekend, an agent of the bank moved to shut down Espat’s most popular recreational venture, Crocland Adventure and Eco Park, located at Mile 25½ on the Northern Highway.

Additionally, receivership notices were reportedly served on Espat’s headquarters at Indeco Enteprises Limited last week.

Indeco and Crocland are co-owned by Luke Espat and his wife, Bertha.

Amandala has received information from an official source that among the debts that Indeco Enterprises Limited had acquired with the Belize Bank are mortgages of BZ$500,000 and BZ$2.6 million, both in March 2009.

The company which owns Crocland, Belize Crocodiles and Reptiles Breeders Limited, had entered into a BZ$854,000 debenture with the Belize Bank back in 2008.

We understand from a worker at Crocland that the operations – which were being managed by Troy Gabb, former Chief Executive Officer of the Development Finance Corporation (DFC) – were shut down between Friday and Saturday. The source said that the company had downsized its staff months ago, when the first rumblings of financial trouble began.

Auctioneer Kevin A. Castillo is executing the foreclosure for the Belize Bank. He declined to comment when we called.

Notices in other weekly newspapers this past weekend indicated that after the expiration of 2 months from the date of first publication, the bank will proceed to sell the 8 listed properties.

On top of the list is 44.7 acres at the Washing Tree Area of Black Creek Reserve, in the vicinity of Biscayne Village.

The notice, released on November 24, 2010 by Godfrey P. Smith, SC, for the Belize Bank, also listed the aforementioned Crocland property, the Indeco properties (hundreds of acres) as well as the buildings in Caribbean Shores, and several parcels in Xaibe Rural in the name of First National Building Society.

A source close to Espat told our newspaper that the 7-storey Renaissance Towers – a project initially billed at US$18 million – in the Newtown Barracks area is not included in the foreclosure.

One of the biggest questions is what will happen to Espat’s interests in the country’s main sea port in Belize City. Espat is chairman of the Belize Ports Limited, which owns 99.5% of the Port of Belize Limited, operator of the port in Belize City and Commerce Bight, south of Dangriga.

Luke Espat is on record as owning 89.99% of Belize Ports Limited, his wife Bertha 0.01% and the Belize Bank the remaining 10% of the shares.

An official company representative told Amandala today, Monday, that the port businesses, as far as he knows, are not threatened with foreclosure.

“There is nothing that links the Port with any of the noise and chattering happening out there,” Reinaldo Guerrero, Chief Executive Officer of the Port of Belize, told Amandala on Monday.

Guerrero said that nothing has been served on the Port and he has not heard anything to indicate that the port is threatened with foreclosure.

The companies mentioned in the media, Ready Mix Concrete and Crocland, said Guerrero, have no direct affiliation with the ports, which Guerrero told us are “performing.”

Both Belize Ready Mix and Indeco Enterprises Limited are located at #5 Calle Al Mar, Caribbean Shores, Belize City.

Luke Espat was recently named as Strategic Development Manager on the executive of the Opposition People’s United Party. He had also made a bid to become the party’s national campaign manager.

Amandala readers will recall that two enterprises of Espat’s were featured in the Commission of Inquiry into the 2006 Development Finance Corporation, under the past administration, in response to public pressure.

Among the “peculiar” transactions listed by Herman Morris, then DFC’s accountant, was $3.4 million for Luke Espat’s Toledo Free Zone project. This was recorded on a borrower’s ledger, but the entry was later reversed, which Morris said could mean that the loan was paid off or transferred to another account.

The notation said “GOB settlement.”

Morris told the Commission that it is very likely that Government had paid it off. It had later been reported that the then administration under ex-Prime Minister Said Musa had settled the debt for 25 cents on the dollar.

Also referenced in the inquiry among the projects for which the DFC had suffered “substantial losses” was another Espat project dubbed the Indeco (Cohune Walk) Housing Project. (No figure was quoted in the documented report.)

Espat was also one of the minority shareholders listed for Universal Health Services (UHS), since renamed Belize Healthcare Partners Limited under a new financing and ownership arrangement. UHS had defaulted on its BZ$33 million debt with the Belize Bank, and the Government of Belize, which had issued a sovereign guarantee for the transaction under the Musa administration, and was called to make good on that debt—a transaction that remains unresolved to this day with pending litigation between the government and the Belize Bank.

In the wider scheme of things, the Belize Bank, the country’s largest bank and a member of the Ashcroft group of companies, has been having major challenges with its loan portfolio, with a non-performing loan (NPL) ratio as high as 27.63% at the end of September 2010, the last quarter for which financials have been reported.

Michael Coye, Deputy Group Chief Financial Officer of the Belize Bank, had told Amandala in August that both consumer and business loans from both productive and distributive sectors constituted the batch of non-performing loans.

The bank, said Coye, would work to bring the accounts back to performing status so that the NPL rate could improve. The rate did improve, but only by half a percentage point, or 0.55%.

In the financial world, non-performing loans that do not recover, generally go into foreclosure, with the bank seizing collateral and putting the company under receivership. The bank may operate the company until it recovers its money and return it to the owners, or sell the company and assets to recover its funds.

When we called for Espat at his office today, we were told that he was not in and he would only visit his office for short periods.

Posted By: Marty

Re: Luke runs out of money? - 12/04/10 02:56 PM

Belize Bank shaking up Luke Espat: Cruise terminal still on hold!

The Belize Bank’s foreclosure on Belizean businessman Luke Espat’s assets last week was but the latest in a number of recent bank foreclosures on several large businesses in Belize, which give silent testimony to the continuing crisis in the country’s economy.

Industry watchers are forecasting tough times ahead in the New Year. Espat’s problems with the Belize Bank might prove to be a minor hiccup for the inventive entrepreneur, whose partnership with Carnival Cruise Lines to build a modern port in the Port Loyola area of Belize City appears to have stalled.

Work on the port has been on hold since the Department of the Environment issued a stop order, for lack of an Environmental Impact Assessment (EIA). After an investment of some US$25, the project has ground to a halt.

Agents of the Belize Bank reportedly shut down Crocland Adventure and Eco Park located at Mile 25 1⁄2 in Biscayne Village, one of his major companies which is also tied to the cruise tourism port facility.

The Reporter has learned that the bank has also served receivership papers at Espat’s headquarters building, Indeco Enterprises Limited, at No. 5 Calle Al Mar Street on the south side of the MCC Grounds.

It is believed Espat is indebted to the Belize Bank for two recent loans totalling some $3.1 million. Another of Espat’s companies, Belize Crocodiles and Reptiles Breeders Limited, which controls Crocland, also signed a debenture for $750,000 in 2008.

The bank advertised in the Sunday, November 28 newspapers that after two months, it would sell some eight properties belonging to Espat and his companies Indeco Enterprises and First National Building Society.

The advertisement, prepared by Senior Counsel, Godfrey P. Smith, from Marine Parade Chambers, listed properties in Belize City, the District, in Belmopan and on the Xaibe Road.

Luke Espat, recently appointed to the Opposition PUP Executive, declined to comment on his souring relationship with the bank, saying this was a policy advised by his attorney.

He was not so tight-lipped about the stalled port construction. He said the one thing he has learned is that you couldn’t fight government, unless you are suicidal.

Espat said former Belize Tourist Board CEO, Michael Singh had done his best to get between him and Carnival, and to some extent he had succeeded.

“We have built up the entire base platform of where the trestle will go. The entire first phase of the free zone is complete. There is US$25 million on the ground. We speak from experience Unless we have government working with you, something of this magnitude cannot go forward.”

He said the business dispute between himself and Carnival can be resolved. The port was supposed to have been finished two years ago, but since the Barrow administration came to power, Carnival has decided that it wants “out” of the project.

Government has to come to terms with us. About US$40 million more could complete the project, Espat said.

The Reporter
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