General — 08 December 2004 — by Adele Ramos

He also said that UHS?s problems today are partly rooted in untimely disbursements from the Development Finance Corporation (DFC) – the Government of Belize?s development bank, which holds $12 million of UHS?s debt, and had also guaranteed a further $17 million of its debt to the Belize Bank Limited (BBL).

UHS made the news this week when reports surfaced detailing a draft consultancy report of Felipe Morris, who was part of a team of the Inter-American Development Bank that had recently visited Belize.

The report listed five major debtors that owed the DFC just over $65 million. The second largest after Novelo?s, a family-owned company that has been in receivership since March this year, was the UHS.

?Another important debtor is Universal Health Services, which is a company that obtained a BZ$12 million loan to complete funding for constructing a hospital in Belize City,? said the Morris report. ?The company also obtained BZ$17 million from local banks, which afterwards were guaranteed by DFC. Thus, the total exposure to DFC is about BZ$30 million (over 80% of DFC?s net worth). The hospital is already functioning, but below capacity. The company is currently not able to service its debt. We obtained the credit file of the loan, but there were no financial projections or feasibility study of the project before loan approval.?

In his interview with Amandala today, Dr. Lizarraga, a former Government doctor who owns 60% of UHS, said that all his personal property had been used to guarantee the loans.

UHS opened its doors in January 1998, said Lizarraga, and it was the then Prime Minister, Hon. Dr. Manuel Esquivel, who, Dr. Lizarraga said, cut the ribbon for the Goldson Avenue facility, which was exclusively set up for imaging diagnostics?having a CT scan, mammogram, ultrasound and X-ray equipment.

He told us that the investors began with loans from the BBL and Barclays Bank, which was their first banker. Then in 1999, UHS got a $4 million loan from the Social Security Board (SSB).

?We overheard that Medical Associates had gotten $4 million from Social Security. So, what you think we did? ?We put together our package; in fact we did a feasibility study. We paid an American consulting company 60,000 Belize dollars,? he continued.

Lizarraga said that with the $4 million, they invested in equipment, a long-term plan for a multi-faceted system, including a 200-room hospital and bought 7 acres of land in West Landivar, where the UHS?s main facility now stands.

The UHS also acquired the Pathology Lab between 1998 and 1999,and built Integral Health Care Southside Health in 2001.

He also said that when the National Health Insurance (NHI) was about to come on stream, the SSB approached the UHS and said, in Lizarraga?s words, ?The rules are that we cannot have any interest as an NHI provider with any medical facility.?

?So the loan was then transferred to the DFC,? he added.

The UHS is co-owned by 26 doctors, including Dr. Anastacio Cob, who owns 30%, and two non-doctors – Luke Espat (9%), and Tony Nijssen, shareholding unknown.

A few years after the UHS center opened, the team decided to seek more financing, and began to approach foreign financiers. Lizarraga said that it always came back to one thing – they needed a Government guarantee. However, Government said that was a no-no, Lizarraga stated.

Instead, Government tried to get the UHS to participate in the securitization scheme. He added: Government said, why go to the bank, go to DFC, which was securitizing?that means, pooling a group of mortgage-backed loans to sell on the foreign market. (Interestingly, our newspaper learned this year that all the securitized loans are backed by a Government of Belize and Social Security Board guarantee.)

Lizarraga said that UHS made its proposal for another $4 million loan to the DFC in 2000, but their loans were never securitized. Instead, UHS got what he called a ?bridge loan? for up to $28 million from the Belize Bank.

?We didn?t get one copper from DFC,? he claimed. ?It was a process that the same thing we were trying to avoid happened.?

UHS launched its Medical Arts and Surgicenter in September 2002, and at the same time signed the $28 million loan agreement with the Belize Bank, said Lizarraga, adding that UHS only used $17 million of the $24 million.

Included in the $17 million is interest, declared Lizarraga, who claimed that of the $30 million debt that is now on UHS?s books, only $16 million is interest and $14 million has actually gone into the project.

The intent, he said, was for the DFC to take on the BBL loan once the securitization was complete, he claimed.

?They [the BBL] got stuck with it, hoping that one day DFC would pay it out, but they never did?? he added. ?DFC was supposed to fund it and could not fund it and did not fund it.?

He further claimed: ?Unfortunately, DFC did not comply [with the September 2002 loan agreement]. We got the disbursement, but it was drawn out over a period of time?It is the Belize Bank?s money that was used?it was stretched over a period of time?it never happened as planned. Up to now, DFC has still not disbursed the whole $28 million.?

He said that it was that borrowing that was to fund the UHS?s operations until the facility reached a better financial position.

?We were supposed to start paying principal and interest in October of the following year, 2003. In April 2003, because of the disbursement inadequacy, I immediately became aware that there was no way in the world that we could have met our target to pay principal and interest in October, which was not our fault.?

DFC?s chairman, Omar Espejo, declined to comment on the specific case when we contacted him this evening, but he told our newspaper that in the event that Government pursues full liquidation of DFC?of which he said that he has received no notice?the DFC?s recourse would be to sell the debt at the best price that it can get.

He told us that apart from what he has heard in the press, he has gotten no notification of the liquidation. He further said that the DFC is proceeding with ?restructuring.?

DFC?s CEO, Troy Gabb, who Espejo said would have more details on the UHS case, was not in office today, we were told.

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