Greedy choke puppy...
Posted: 25/08/2009 - 10:17 AM
Author: Adele Ramos - adelescribe@gmail.com
The draft bill
The 15-page amendment to the Belize Telecommunications Act (No. 16 of 2002) deals vastly with the issue of compensation for BTL’s shareholders.
Under the terms of the proposed amendment, the Financial Secretary would attempt to work out compensation with BTL shareholders, and failing an agreement, the dispute could be submitted to the Supreme Court to determine compensation.
The Minister would invoke an order, and anyone violating that order could face a fine of up to $5,000 a day and prison term not exceeding two years.
The National Assembly will be asked to vote to set aside money to pay the compensation...The BTL purchase is not in the budget, and according to the draft legislation, compensation would be paid “out of moneys voted for the purpose by the National Assembly.”
However, the Financial Secretary would deduct from that any monies due to the Government, including “arrears of any taxes, duties and charges and all other sums whatsoever.”
Prime Minister Dean Barrow this morning made a drastic move by rushing through a bill designed to take sovereign control of the country’s dominant telecommunications provider, the Belize Telemedia Limited (BTL), from the grip of British billionaire Michael Ashcroft—who Barrow also revealed had acquired majority control of the only other major telecommunications company in Belize—SpeedNet Communications, owners of Smart, as of January this year.
The sale of BTL’s shares, said Barrow, would be principally to Belizeans, although he has no problem with any reputable company from abroad purchasing interest in BTL.
Barrow said that the takeover is only directed at the 94% controlled by the Ashcroft interests; the shareholdings owned by other Belizeans will be left intact; and all BTL’s nearly 500 workers will keep their jobs.
Meanwhile, government proposes to “compensate” the Ashcroft companies. However, claims could range from $300 million to $600 million—substantially more than the US$90 million price tag BTL was sold for in the 2003/2004 buy-back under the Said Musa administration.
“There has to be an audit and proper valuation of BTL,” Barrow told our newspaper, indicating that the value is inflated by an accommodation agreement, which his administration has rejected.
As to where government will find the money to pay off Mr. Ashcroft, Barrow said that by the time the award for compensation is made—presumably by the Supreme Court, Government should have a fair amount of revenue from the sale of the shares to settle that tab.
Late this afternoon, Telemedia issued a release, advising that it was in the process of detaching Channel 5 and Great Belize Productions, owned by a subsidiary, from BTL’s assets, and there were also reports of other hurried transactions being executed at the management level.
“The new board [of BTL to be headed by Net Vasquez] will have to look at it in terms of efforts to bleed the company,” said Barrow, “To an extent, we can’t prevent them from doing things of this nature.”
Whatever they do now will factor into a discount on the compensation package, said Barrow, adding that after the takeover is complete, the lawyers and directors will look at that.
Even though Ashcroft had cemented total control over telecommunications, after entering the market 17 years ago, he always wanted more, Barrow charged.
“All remained well until February 1992, when the predatory designs of one man were facilitated by the greed and hunger for cash of the then PUP administration,” said Barrow. “At that time, the PUP began to sell shares in BTL to Michael Ashcroft at a rate and in a manner that was counterintuitive and counter nationalistic.”
Since the change of government in February 2008, the Barrow administration and the Ashcroft group of companies had been embroiled in a tangled web of litigation, stemming from a string of once-secret agreements—including what Barrow describes as the “treasonous accommodation agreement”—awarded by the last People’s United Party administration—that’s after the Musa administration bought back BTL from Ashcroft at the end of 2003 for a US$5 million premium, sold it to Jeffrey Prosser, repurchased it after that deal fell through, and then resold it to a series of Ashcroft companies, with several millions in compensation awarded in the form of favorable agreements which entailed tax perks and other concessions for those companies.
When the Belize Telecommunications (Amendment) Bill was presented at this morning’s House meeting, none of the Opposition members present supported it. In fact, Leader of the Opposition, Johnny Briceño; Freetown area representative, Francis Fonseca; and Corozal North area representative, Florencio Marin, Jr., voted against the bill just before its third reading. Lake I area representative Cordel Hyde and Albert area representative Mark Espat abstained from the vote. Former prime minister, Said Musa, Fort George area representative, did not attend today’s meeting.
The vote was carried with 22 for, 3 against, 2 abstentions, and 4 absent.
Responding to today’s decision, Telemedia called the move “an outrageous abuse of executive power,” “unconstitutional” and “unlawful.” It also said the takeover is targeted at certain shareholders, particularly the Ashcroft-controlled Hayward Trust and the BTL Employee’s Trust.
Briceño said that his relatives are the owners of SpeedNet; however, Barrow revealed this morning that Ashcroft owns that company, too: “That is right, and I have the documents to prove it. 77.38% of SpeedNet is owned by three companies: Callerbar Limited, Riddermark Ventures Limited, and Heaver Holdings Limited. These three companies are headquartered at the Belize City Cork Street premises of Michael Ashcroft, and controlled by two of the now notorious trusts owned by Michael Ashcroft.” (The Briceños received roughly $8 million for the sale, said Barrow.)
Despite the takeover of BTL, Ashcroft will retain his profit-making interests in the industry, because his companies own SpeedNet and will be left to fly, he added.
SpeedNet launched Smart back in March 2005, in an era when the PUP government boasted—amid the failings of Glenn Godfrey’s Intelco—that it was creating competition. However, an accommodation agreement signed with the last administration promised BTL that government would not allow any new competitors in the market, at the level of full service telecommunications providers.
BTL insisted that the Barrow administration honor the accommodation agreement, but back in May, Barrow said that his government would go to another level to end things one way or another – though he did not immediately concede to rumors that he would propose a buy-back of BTL.
Those rumors were confirmed today, when the UDP reps in the House unanimously supported the passage of the takeover bill.
While many Belizeans are hailing the takeover as a good move, some are skeptical, in light of what had transpired with the juggling of BTL between 2003 and 2005—those deals leading most recently to an award granted by the London Court of International Arbitration to the Belize Bank of $44 million in damages.
Barrow claims that this time, there are “no games, no ulterior motives, no hidden agenda.”
He said that the intent is to close the takeover over the next two days, with the bill going to the Senate on Tuesday and it being signed into law and the respective order for the takeover being penned by Melvin Hulse, Minister with responsibility for Public Utilities, by Wednesday.
BTL was re-branded back in 2007, after the Vesting Act transferred the business of Belize Telecommunications Limited to Belize Telemedia Limited.
“I have no idea how it will shake out,” Prime Minister Barrow told Amandala.
Channel 5, Great Belize Productions, detached from BTL
Telemedia claims that its board of directors held an emergency meeting on Sunday, and decided to pay Telemedia shareholders off for a subsidiary – Katalyst Developments Limited, the owner of Great Belize Productions and Channel 5. The effect of the decision is to detach the television company from Telemedia.
Even though the Government had not announced that it was intending to table and pass the telecommunications amendment at today’s sitting, word got to Telemedia’s ear, early enough to enable Ashcroft’s lawyers, Allen & Overy in the UK, to be able to write Barrow over the weekend challenging the takeover.
However, BTL shareholders, primarily the Ashcroft group, which controls over 90% of BTL, would not get cash for the value of their investment in Channel 5/Great Belize Productions, but get shares in the company apportioned to them based on the existing shareholding in BTL – what is termed dividend in specie.
On the other hand, shareholders with less than 1,000 shares in Telemedia—the smallest of shareholders—will have no part in the new company and would instead receive 17 cents for every share they now hold in BTL for the detachment of the Katalyst assets. Those who had 1,000 shares or more will receive share certificates in Katalyst.
Note that Telemedia’s announcement this evening comes on the heels of an announcement by Barrow as he tabled the amendment to the telecommunications act, that Net Vasquez would become the interim chairman of BTL. (Vasquez’s family owns the rival television station, Channel 7.)
Barrow told Amandala in response to the Telemedia release that the Government has no interest in acquiring Channel 5, although any divestment of BTL’s assets would have to be considered when the question of compensation to BTL’s shareholders comes up.
Belize Bank holds asset mortgage
The question of control over BTL’s assets has not yet formed a part of the takeover discussions. We know that in July 2007, BTL had secured a mortgage for US$22.5 million (repayable in four years) from the Turks and Caicos branch of the Belize Bank, a sister company. As a part of that deal—a first priority mortgage, meaning that the bank has first call on the assets—some key BTL assets had been mortgaged to the bank, including the company’s headquarters - the Esquivel Telecom Center, located on St. Thomas Street, and also the Albert Cattouse Building in downtown Belize City, among other properties.
The loan, according to BTL’s financial statements, is also guaranteed by certain BTL subsidiaries. Final installment is due in July 2011.
|