General — 28 February 2014 — by Kareem Clarke
Citrus MOU to be signed this Friday

Citrus industry however, remains in a bind

While the unveiling of a signed Memorandum of Understanding (MoU) to be held this Friday, February 28, by the stakeholders in Belize’s hemorrhaging citrus industry might be a hint of good news, the indispensable agroindustry is still faced with lingering predicaments which continue to threaten its welfare – problems they hope a newly restructured board of directors of the exporting company, the Citrus Products of Belize Limited (CPBL), can fix.

Amandala headed out to the Pomona Valley today to get a sense of the difficulties being suffered by those who have been agitating for the betterment of the industry over the past few years, since sour relations between the two main shareholders of CPBL – the Citrus Growers Association (CGA) and Banks Holdings Ltd. of Barbados – deteriorated even further, causing gridlock at the board level.

First, though, we got an update in regards to the signing of the recently drafted citrus MoU which was proposed by the Government of Belize (GOB) last Monday, February 17, and was to have been finalized two days later. The signing didn’t happen because of an unwelcomed addendum – reportedly added by Banks Holdings – leading to a holdup that lasted a little over a week.

The chairman of the Belize Citrus Growers Association Investment Company Ltd., Denzil Jenkins – who informed us earlier this week that the CGA was in the process of “dotting the i’s and crossing the t’s” – told Amandala today that they have already passed that stage and hopefully all parties will sign onto the MoU by Thursday of this week.

He said that the longstanding difference of opinions between the CGA and Banks Holdings played a part in the delay; therefore, the lawyers for both parties were busy sorting out the technical differences.

While the injection of government funds via the Social Security Board (SSB) solves the Citrus Products of Belize Limited (CPBL)’s immediate financial concerns, ultimately there are still unresolved issues in the citrus industry.

“The parties believe that with the restructured board [of directors] – where there will be 2 directors from the Citrus Growers Investment Company, 2 directors from Banks, a director representing SSB, one representing Heritage Bank and one independent director to be approved by Banks and ICL – the Growers’ Investment Company Ltd. – we feel that with that structure, we now have an opportunity of moving CPBL forward,” Jenkins said.

Incessant disagreements among CPBL’s present board of directors – the latest being over the selection of an auditor to assess CPBL’s books – have effectively crippled the citrus industry for some time.

Eccleston Irving, the chairman of the CGA’s Committee of Management, described the CPBL board as a “dysfunctional” body which was basically defunct and did not function as a substantive committee.

Irving said that the new CPBL board gives the company stability, in terms of having a fully functional board with a full-time chairman, pertinent committees and the necessary governance strengthening.

With that out of the way, Irving said, “The CGA can now be better focused as to how to help the growers in this atmosphere of citrus diseases and other areas of need.”

The future of CPBL – the citrus processing company – was shrouded in obscurity and uncertainty after its bankers, First Caribbean International Bank (FCIB) and Heritage Bank, held off on badly needed funds to pay citrus farmers, because of the impasse over the appointment of a CPBL auditor.

The growers then appealed to Government, which decided to assume FCIB’s role as banker for an interim period, after which the SSB will then take over the loan from Government and become CPBL’s creditor.
As part of the agreement, CGA’s outstanding loan of $9.1 million with SSB will be liquidated in lieu of 10% of CGA’s shares in CPBL. That would leave Banks Holdings with the majority of 47% shares, while the CGA’s stake – which stands at 51% – would be reduced to 41%.

Irving notified us, however, that there is a buy-back clause in the agreement.

“One of the features of giving up the 10 percent shares is that it has a buy-back clause over 4 years, so the growers can have a breathing space in terms of acquiring back those shares,” Irving said.

To do that, Irving said, the CGA will try to infuse new capital into the industry, as well as have citrus farmers diversify their crop.

Some of the CGA’s opponents have accused them of usually being the aggressors in the dispute with Banks. In responding to those allegations, Irving said that the CGA are actually the victims.

“The facts will speak for themselves. Prior to our people being on the board, CPBL was projecting a loss of 9 million dollars. Today, the company has 10 million dollars in retained earnings; so despite the back-and-forth, as far as we are concerned, we were able to stabilize that company for our shareholders; otherwise it would have already been gone,” Irving said.

Jenkins said that the deal allows SSB to invest its funds where there is an opportunity for a good return.

“Getting involved in this deal offers SSB an opportunity of gaining 8-10 percent on its money in a business which is, by all measurements, a viable business. The problem with CPBL and the citrus industry at the moment is bad management,” Jenkins told us.

He expressed the belief that the Prime Minister has a plan to deal with all the lingering issues – including ousting the current CEO of CBPL, Dr. Henry Canton, whom CGA has been trying to remove for years.

“It has been generally agreed that there is need for new management at CPBL,” Jenkins said.

Amandala was informed that CGA, SSB and GOB should sign the MoU by tomorrow, Thursday February 27.

A press conference is planned for Friday to unveil the signed MoU.

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