Finance Minister defends B.T.L. deal
The sale of Belize Telecommunications Limited: It’s a deal with profound implications for consumers, the public sector, and the entire economy of Belize. With one due diligence date already missed and over fifty-seven million borrowed U.S. dollars on the line, the Belize government has a major stake in the outcome. This morning News 5’s Stewart Krohn sat down with Minister of Finance Ralph Fonseca to find out just where the negotiations stand.
Ralph Fonseca, Minister of Finance
“We’re still in the due diligence process, but the sixty days ran out. As I explained to the Belizean people before, and in the National Assembly, we had an agreement with the Carlisle people where we would have sixty days for the Government of Belize to allow a due diligence process to take place in B.T.L. by I.C.C., this new company, and we were hoping that the sixty days would be enough time for that due diligence process to take place. What we didn’t take into consideration, Christmas time, we didn’t take into consideration-to be quite honest-the complexity of many of the issues and the fact that you’re talking about a new person coming into the market. The parameters that they had to fill out in order to complete their due diligence so they could turn around to their shareholders and to their bankers and say that we have looked at what we should be looking at. So we ran into the unfortunate situation where the sixty days ran out, they had not completed their due diligence and we had to complete the transaction.
I have said to the government, to the people of Belize that the intention was never for the Government of Belize to own the shares of B.T.L. It is still not the intention of the Government of Belize to own the shares of B.T.L. The idea was that with this agreement the shares would have been transferred smoothly from Carlisle over to the new company, I.C.C. Because the sixty days ran out, we had a couple of options. We could have given up the agreement, gotten our money if you like back from Carlisle and Carlisle would have their shares. And Carlisle would continue as they had been moving forward with according to their business plan, which was not working out along with our ambition to have competition going as quickly as possible. The other option was for us to complete the transaction, and we took that option. We completed the transaction, paid down the difference that was required in order to complete the transaction. So now for all intents and purposes, the government of Belize owns those shares of B.T.L., but we have not transferred the shares into the name of the Government of Belize. We are in control of them and we have them in a legal box if you like, still hoping that within the now next thirty days we would be able to have those shares written up in the name of I.C.C.”
The question that obviously arises is what guarantees that I.C.C. will complete the deal and reimburse government its fifty-seven million dollars? Or if there are no guarantees, what is plan B?
Ralph Fonseca
“Our agreement with I.C.C. is that they will pay that exact amount for those shares, and there is no horse trading and they are not fighting about that. The due diligence process has nothing to do with that. If I.C.C. were not to buy the shares after the due diligence period, and that could happen, then we would have again two options: one would be to give the shares back to Carlisle and get our monies back, or the other would be to take the shares to the market. In the meantime, in order to make sure that government is not in a liability situation with B.T.L., we have continued the management of B.T.L. with the Carlisle people. So the Carlisle agreement is still in place, Carlisle is still managing B.T.L. because I had said to the Belizean people that government would not want to put taxpayers money at risk.”
Stewart Krohn
“So the first option you gave of Carlisle buying the shares back, are they obligated to do that if the deal with I.C.C. does not go through?”
Ralph Fonseca
“Yes.”
Stewart Krohn
“So there is no risk that the Government of Belize will wind up holding the bag for fifty-seven million dollars worth of shares?”
Ralph Fonseca
“No risk, unless we wanted to hold the shares. Because for instance a group of Belizeans had come together and decided that they could buy it out. We have talked with B.T.L. employees, we have talked with many people, and there are other people that are interested, but we do have this agreement with I.C.C. and we do want to stick to the agreement. And we do believe that sixty day period just did not happen to be enough.”
Stewart Krohn
“So the worse care scenario for the Government of Belize would be that the deal drops through, Carlisle gets the shares back and really all Government has put at risk is essentially the interest on the loan to purchase the shares?”
Ralph Fonseca
“Yes. If we had to return the shares to Carlisle, then yes, we would have expensed if you like the interest for those loans. Obviously, once we sell the shares, and because we have owned the company during that period of time, there would also be some revenues coming in for the company for that period of time, which should match very closely the interest cost of taking on that loan. So there would still be a chance of recovering, although we’re giving it back to Carlisle, but not recovering as much as if we were to sell off the shares to I.C.C. and have I.C.C. also pick up other shares, like shares like Social Security, like shares that the Government of Belize holds, were we would make a huge profit, which is a lot more than the amount that we had invested with the interest to borrow the money.”
Stewart Krohn
“What is the present status of the negotiations over interconnection rates?”
Ralph Fonseca
“Interconnection, again, has proven to be more difficult than most of us thought it would have been because you have to understand that we’re not operating in isolation here, there are many, many case taking place all over the world where different companies are suing each other for interconnection where the incumbent company is holding off and they don’t want competition to take place. So almost everyday there are difference decisions that are setting different precedents. There are different organisations that are coming up with difference formulae.”
Stewart Krohn
“You mentioned INTELCO. Now at least to the public, it appears that INTELCO has gone from being government’s darling to a position where they are certainly losing large sums of money everyday. What is the situation now vis-à-vis INTELCO?”
Ralph Fonseca
“We say to them just like we say to Mr. Carlisle, we’re doing the right thing. And if we don’t do the right thing now then you’re going to pay for it later. We can’t just act based on knee-jerk reactions. Because we’re a government, we can’t just legislate or have the P.U.C. demand certain things and then afterwards you’re gonna end up in court and you’re gonna lose anyway, or you’re gonna have injunctions against you. This happens all the time to us. At one time, Ralph Fonseca is considered as being close to this person, and then you next thing you know, we’re fighting with that person, as far as the public perceives it. They say that we’re involved with INTELCO, now they’re saying INTELCO is against us. It’s just that we’re doing the right thing. When we tried to attract Carlisle to Belize, we had to spend time with Carlisle and we think we did the right thing. Belize has moved forward in the international community. But when you bring those types of players onto the stage, you move to a different level of negotiations. When we brought competition in with INTELCO, we did the right thing and we try to do it with Belizean people, so again they were close to us. Sometimes in one day both of them are upset with us because they can’t get their own way. We’re trying o do the right thing for the Belizean people.”
Fonseca told News 5 that in addition to the question of interconnection rates, the prospective buyers of B.T.L. are looking closely at a pending lawsuit against B.T.L. that seeks millions of dollars in refunds for customers who were charged rates that were not approved by government.
