S.S.B. Chairman says B.E.L. is a safe investment

According to S.S.B. executives, B.E.L. is need of operating capital and the S.S.B. has excess liquidity in reserves.

Jose Sanchez

“How fast would we see those funds being transferred for the debentures?”

Doug Singh, Chainman, S.S.B.

“There is a legal process that Social Security has to undertake. Once the investment committee has made the recommendation and the board has approved it, it must go to publication for two consecutive weeks in the gazette and for two weeks in two newspapers. Once that is completed, the Social Security Board is then in a position to disburse to the institutions. In 2011, B.E.L. made a net profit of one point eight million dollars and that was during the period of nationalization. That was during a period when they felt that their acquisition cost was so overwhelmingly high that there was the possibility of blackout and I think they had cash flow problems during that period. In 2012, B.E.L. has taken, from what they have demonstrated to us, the steps to reduce expensive debt and to refinancing with much lower debt. This is one of those exercises that they are doing. If you would look at their projections, there has been a tremendous reduction in B.E.L.’s debt and a tremendous reduction in the debt servicing. I believe their debt servicing fell from about thirteen million dollars in 2011 to just over five million dollars in 2012. In 2012, B.E.L. is not projecting a profit of in excess of eight million dollars on the prospectus—the most revised prospectus that we have received. That gives us the level of confidence that the kind of returns and the path and direction of B.E.L. is certainly in a positive path and it is heading back to the direction of the form of management that B.E.L. had in the past. Any institution that uses cash at that rate always has an immediate need for the cash. Can B.E.L. get by without the cash from Social Security or any other institution with the short time period and still function? Absolutely, because the commercial banks are there. In fact, the executives from B.E.L. have indicated that as long as they know what the outside date is for the longer term commitment at a lower interest rate, they know how to plan. They can then engage in shorter term financing at perhaps a higher interest rate than commercial banks, but their objective is primarily to reduce the interest rate. It is my understanding that there is always need for cash—whether there was a need to pressure Social Security Board for investment, absolutely not. I can deny that absolutely.”

Net Vasquez, Chairman, Investment Committee, S.S.B.

“They need operating capital right now and if they need it for that; that is why they give you the collateral—until they can tidy up a few things. You get your certificate. Any company takes, big company take about; the law gives you two months before you get a certificate. So I mean that is not out of line.”

This is the second major investment by the S.S.B. to government controlled companies. A fifty million dollar investment was made by S.S.B. for shares in Telemedia. The point is that S.S.B. is not investing in the private sector, but in B.E.L. and B.T.L., both government-owned companies, that are mired in litigation, which could result in their ownership reverting to the former owners.