Social Security to bail out citrus industry

There is crisis in the citrus industry, with dark clouds gathering overhead. It’s certainly not the first in what is a volatile industry, but it is serious. In recent weeks, Citrus Products of Belize Limited, the company which accepts and markets citrus, has been unable to make regular payments to growers. The crisis is rooted in the deadlock that has occurred between the two major shareholders in CPBL – the Citrus Growers Association and Banks Holdings Limited. CGA owns fifty-one percent of the shares while Banks holds forty-six point five-nine percent of the shares. But while the CGA is the majority shareholder, there was an investment agreement under which BHL has veto powers over the affairs of CPBL. BHL has used those powers to veto the appointment of a new auditor as directed by the Board. The operating capital provided by the commercial banks then dried up. Prime Minister Dean Barrow held a press briefing this morning where he reported that ultimately the Social Security Board will use public funds to acquire shares in the amount of nine point one million dollars from the CGA. Mike Rudon was there and has the story.

FOR VIDEO CLICK HERE.

Mike Rudon, Reporting

The current and particular crisis in the industry has to do with money. In recent weeks CPBL has had difficulties in meeting payment to growers for the delivery of produce. Last week it got to the point where a lack of working capital being extended to CPBL by its banks made it likely that the factory would stop operations. But after intensive discussions, PM Barrow is convinced that a way forward has been forged. In the immediate short term, First Caribbean International Bank has been persuaded to advance immediate working capital funds to keep the factory going. And then G.O.B. gets intimately involved.

Dean Barrow

Prime Minister Dean Barrow

“The Government of Belize is proposing to buy out the FCIB facility…buy out the loan that FCIB has with CPBL. The idea is that S.S.B. will afterwards take that loan…government will on-sell it to S.S.B. since in fact S.S.B. is in the business of making loans while the government of Belize is not, or only unusually so…and that ought to see then S.S.B. stepping permanently into the shoes of FCIB.”

PM Barrow is confident that the investment by the S.S.B. will meet Board and public approval, since he says the move makes sense practically and financially. And besides that, it is a strategic move on the citrus chessboard to make the King, in this scenario Banks Holdings Limited, vulnerable.

Dean Barrow

“S.S.B., the proposal is, would also become a shareholder by way of the transfer of a portion of that fifty-one percent of the shareholding that’s currently held by CGA. Now that would come about in this way. CGA is indebted to S.S.B. in the amount of about nine point one million dollars. CGA would liquidate the debt to S.S.B. by way of this share-swap…in other words S.S.B. would take nine point one million dollars worth of CGA shareholding. What the transfer of this portion of the CGA shareholding to S.S.B. would do would be to give S.S.B. a ten percent stake in CPBL. It seems like after the debt is converted to shares, the new structure would look something like this – CGA would have forty-one percent, BHL would have forty-six point five nine percent, S.S.B. would have ten percent and other shareholders would have two point four one percent.”

And then it all falls into place. PM Barrow says that it has been agreed with all parties, including Banks Holding Limited, that the Board would then be reconfigured. CGA would appoint two directors, Banks Holdings would appoint two, Heritage Bank would appoint one, S.S.B. would appoint one and G.O.B. one.

Dean Barrow

“The hope is that all this would do two fundamental things. Number one…get us over the immediate financial hump insofar as CPBL is concerned…allow us to pay growers for fruit and allow CPBL to keep marching on. Two…the reconfigured Board with these three new directors to hold a balance between CGA on the one hand and Banks Holdings on the other ought to be able to forge a new modus Vivendi if you will…ought to be able to usher in an era of peaceful co-existence at a minimum. I’m not sure that it isn’t too much to expect that in fact everybody would hold hands and gather round the campfire and sing Kumbaya…but practically speaking, it appears that in terms of the two previously warring factions there is a determination on both sides to allow this triumvirate of new directors to help to pour oil on troubled waters.”

G.O.B. would appoint a director only until the FCIB facility is on-sold to S.S.B. S.S.B. would then most likely appoint two directors. Mike Rudon for News Five.