By Marion V. Ali
The first set of funds made possible through a new configuration designed to rescue the Citrus Products of Belize Limited, CPBL, and by extension, the citrus industry, is expected to be released by Friday to assist the company to meet urgent debts and to keep its doors open.
The CPBL is hoping that $4 million, an unsecured loan, will be disbursed by the First Caribbean International Bank, FCIB, as well as another $700,000 that the Government of Belize is said to owe the company in General Sales Tax receipts.
The release of the funds is the latest in a sequence of events to take place this week, after the Government intervened.
As part of the new strategy, a Memorandum of Understanding calling for a newly restructured seven-member Board of Directors to govern the company through its bleakest days yet, comprises signatories from CPBL’s shareholders, the Citrus Growers Association, Banks Holdings Limited, and now the Government of Belize.
Chairman of the Board of Directors of Banks Holdings, Anthony King and the CEO, Richard Cozier, visited Belize for the discussions.
The CGA and BHL, a Barbados-based company, have been embroiled in a bitter dispute over administrative operations of the company for the past few years, a dilemma that has crippled its progress. The saga at CPBL had grown so acute that there was a cash-flow crisis and an impending threat of a total shutdown.
The bailing-out of the Citrus Products of Belize Limited, the company that produces citrus by-products for local and regional consumption, came at the behest of Prime Minister, Dean Barrow.
Barro outlined the details of a new arrangement on Monday. It calls for a restructured Board of Directors, and a plan for immediate financial intervention involving the Belize Social Security Board, and the First Caribbean International Bank, and Heritage Bank.
The MOU, chiselled out in the presence of Acting Prime Minister and Minister of Natural Resources, Gaspar Vega, stipulates that the Board will consist of a make-up of two members from the CGA, two from Banks Holdings Ltd., one from the SSB, one from Heritage Bank and one from GOB.
Key on Tuesday’s agenda was the need to allocate funds to pay growers for several weeks of fruit delivered, coupled with the assumption of CPBL’s loan facility.
That was resolved when the Government convinced the FCIB to advance within the limits of its facility with CPBL, the $4 M at its earliest convenience, after which the Government is proposing to buy out the FCIB facility that it has with CPBL. According to Prime Minister Barrow, who held a press conference on Monday prior to leaving the country, “the idea is that S.S.B. will afterwards take that loan…and that ought to see the SSB stepping permanently into the shoes of FCIB.” This makes the SSB a shareholder through the transfer of a portion of CGA’s previously held 51% shareholding. This is how it will work: The CGA, which owes the SSB $9.1 M, would then liquidate the debt to the SSB, with the option to eventually buy back the shares. The transfer of these shares in essence now gives the SSB a 10% shareholding in the CPBL, CGA would have 41%, BHL would have 46.59%, S.S.B. would have 10% and other shareholders would have 2.41%.”
The new configuration would hopefully do a number of things in the PM’s view — address the financial hurdle that CPBL is faced with, create cash-flow to pay the growers, and through the new Board, hold a balance between CGA and BHL to, in his words, “usher in an era of peaceful co-existence at a minimum.” And if the adjustments don’t bring about any meaningful change in the way forward for the two parties, the PM said that “Government via S.S.B. has the authority under the loan arrangement, under the security arrangements, to take the running of the company out of the hands of the shareholders completely and appoint a professional, impartial, unbiased Receiver.”
The crisis that CPBL was facing was that CGA and BHL were at odds over an Investment Agreement which gives BHL a veto vote to override any decision made at the Board level. BHL has used those powers to veto the appointment of a new auditor, which the CGA has been demanding and an appointment that the Board had agreed upon. Coupled with that is the issue of CPBL’s CEO. Dr Henry Canton, whose office has been a major subject of contention for the CGA. His tenure with the company is one that is up for possible change. But Canton, who was still on the job on Thursday, revealed to The Reporter that the company’s outstanding debts are owing to the Belize Electricity Limited, BEL, the Belize Natural Energy, BNE, and to about 60 small growers for deliveries made over the past three weeks. He added that not all the growers are harvesting/delivering at this time.
The CGA, which represents 90% or about 460 of the citrus farmers, wanted to buy out the shares owned by BHL, an endeavour too costly for the undertaking, with a price tag of around US $20 M. Said the PM on the issue: “They [CGA] had approached me for Government to assist with the purchase price. I absolutely and flatly refused. I don’t think that Government has any right to give public funds to what is in fact — CGA is this hybrid, it is an association but you’ve got to treat it certainly as a sort of private sector entity – I don’t believe that Government has any right to provide public funds for that sort of an undertaking.”
The CGA, meanwhile, has financial woes of its own, with its outstanding debt of $9.1 M. But SSB Chairman, Doug Singh, had his own views on that issue, saying that “the fact that it [SSB] is not liquid does not mean that it doesn’t have an inability to pay us on time.” The PM has also assured that the CGA will not receive any monies in the transactions that are to occur through the new arrangement.