M.O.U. signed by G.O.B. and Citrus Industry stakeholders

After two weeks of carefully ironing out the details on the proposed way forward in the embattled citrus industry, Prime Minister Dean Barrow held a press conference this morning, where he presented the content of a memorandum of understanding signed by various stakeholders, including the Social Security Board, the Citrus Growers Association and Banks Holdings Ltd., among others.  The MOU makes way for the appointment of a new seven-member board of directors to preside over the general operations of Citrus Products of Belize Ltd., the production arm of the industry.  News Five’s Isani Cayetano was at the media brief and has that report.

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Isani Cayetano, Reporting

While mention of an existing financial crisis within the citrus industry may have taken a backseat to other current events in the news media, great efforts were being made behind the scenes to resolve the issue of CPBL’s indebtedness.  The solution, in part, comes with the recent signing of a memorandum of understanding to restructure the board of directors of the beleaguered company.

Prime Minister Dean Barrow

Dean Barrow

“Two persons nominated by CGA, two persons by BHL, so the balance is even up to that point in time, and then the triumvirate of those who, hopefully, will be able to ensure that any logjam will be broken, one person nominated by Heritage [Bank], one person nominated by Social Security Board and one person nominated by the Government of Belize. It’s clear to me that there is a genuine interest on the part of both of the equity stakeholders, that is BHL and CGA, to forge a way forward.  There is the recognition that we hang together or we will hang separately and so I am very, very pleased indeed that we are where we are now.”

Where the matter stands at this present juncture is quite simple, government or S.S.B. will assume First Caribbean International Bank’s loan to CPBL by the end of March.  That debt is said to be fifteen million dollars.

Doug Singh

Doug Singh, Chairman, S.S.B.

“Social security’s task is a two-part task.  It’s looking at two transactions, one transaction which is absolutely separate from the other is with Citrus Growers Association.  S.S.B. had extended two loans to Citrus Growers Association, one of them fourteen years ago, the other about four or five years ago.  One, for the purchase of shares in a factory, the other for working capital and for on-lending to the industry.  Those loans now, on the request of CGA, are being considered to be converted into shares of what CGA owns, via its investment company in the factories.”

Despite the fact that there won’t be any infusion of capital into CPBL, the recommendation to convert debt to equity has to be presented to the various subcommittees of the Social Security Board for approval.

Doug Singh

“Now the process going forward is for the investment committee of the Social Security [Board] to look at the loan before it can make a recommendation or decides not to recommend it to the board of directors.  In accordance with the Social Security Act, there are two bodies.  There’s the investment committee which its own chairman.  It’s an independent body that has representatives from the private sector and the unions.  And there’s the board of directors of the Social Security [Board] that has no representation on that investment committee; they’re absolutely separate. The board will thereafter look at the loan and decide where it goes with it.”

The outcome of that decision, if favorable, will result in CGA relinquishing ten percent of its shares to S.S.B.

Dean Barrow

“What CGA is doing is transferring roughly ten percent, or perhaps just a little under ten percent, I’m not quite sure of the exact figure, ten percent of its shareholding to SSB by way of liquidating its debt, CGA’s debt to S.S.B., but with an option to repurchase those shares sometime within the next four years.  [It’s] an exclusive option to repurchase and thereafter a right of first refusal.”

The move, says Denzil Jenkins, chairman of Investment Company Ltd., a CGA subsidiary, is a win-win situation which allow S.S.B. to earn from its deal.

Denzil Jenkins

Denzil Jenkins, Chairman, ICL

“We want to seek to give comfort to the public, as we hear lots of expressions concerning the government using, they say, the people’s money to rescue the citrus industry.  As the PM has mentioned, the funds that are going to be used by S.S.B. gives S.S.B. the opportunity of earning, whereas putting that money at the commercial banks and earning, say two point five percent interest, there is the opportunity, I will not say ten, I’ve been saying between eight and ten because we will try and get Doug to bring that interest down, but at least that’s a six percent interest which is more than twice what SSB will be getting putting its funds in the bank.”

The newly signed memorandum of understanding does not address the issue of Dr. Henry Canton’s position as C.E.O. of Citrus Products of Belize Ltd.  That, according to PM Barrow, is a decision that will be taken by the newly constituted board of directors. Reporting for News Five, I am Isani Cayetano.