The Government of Belize opened the sale Friday of 22 million shares in Belize Telemedia Limited (BTL)—amounting to roughly 45% of the company, at BZ$5.00 a share. According to the just-released prospectus, the shares will be sold in blocks of 100, so that the minimum investment a purchaser can make is BZ$500.
Making the announcement this morning at the Bliss Center for the Performing Arts was a panel composed of government financial advisor, Dr. Manuel Esquivel; BTL’s executive chairman, Net Vasquez; Prime Minister Dean Barrow and Financial Secretary Joe Waight.
The purchaser must be a Belizean, and the government says that the disclosure must be made in the form appearing at the end of the prospectus, a booklet which details BTL’s financial projections for five years as well as the un-audited financial statements for 2010.
Financial Secretary Joe Waight said that Belizeans living abroad can send their applications via registered mail with their payments and proof of citizenship.
If the interest from abroad is high enough, government would also try to facilitate them through Belizean embassies abroad, said the Prime Minister.
One of the big questions that have been raised is the market value of BTL. Based on our calculation, it has been fixed at $297 million for the purposes of the divestment. The government did not specifically quote a figure, but we have derived it based on the available information.
Previously, Prime Minister Dean Barrow had told us that the sale price of the shares would be a dollar off the market valuation. Since the sale price is $5, the market valuation would be $6. BTL has an issued share capital of 49.5 million, which, if multiplied by a $6 per share figure, would amount to a company value of $297 million.
After the August 2009 takeover, Government holds 46.8 million (94.54%) of those shares—a value of $280 million using the prospectus numbers. The Government still owes the Michael Ashcroft group for these shares, and there has been no agreement for compensation, according to the Prime Minister.
There are fewer than 1,000 minority shareholders in BTL. According to the prospectus, the Baron Bliss Trust has 136,734 shares (0.28%) in BTL, the Public Service Union and the Belize National Teachers Union have 794,732 (1.6%), and 908 other shareholders have 3.58% or 1,774,673 shares, according to the prospectus document.
Prime Minister Barrow said again today that Government would reserve a 10% block of shares for the 457 workers of BTL. That would work out to just under 5 million shares for a sale price of about $25 million—about $55,000 a head, if everyone from the messenger to the manager participates in the purchase.
The Prime Minister told us Thursday that he would offer those shares to BTL workers at a discount, but did not specify how much that discount would be.
Although the Government has opened the public offering of shares, there is an application pending in the Court of Appeal, filed by former BTL executive chairman, Dean Boyce, asking the court to issue an injunction on the sale and to furthermore declare the nationalization unconstitutional, as he contends that the government wrongfully took away the shares.
At the launch of the share sale this morning, the Prime Minister indicated that even if the court were to rule that the government was wrong in taking over BTL, third parties purchasing now would not have to worry about losing their shares, since the sale is being done after a Supreme Court declaration that the sale was, in fact, constitutional.
It would be the government, said Barrow, that would be “on the hook” for compensation and damages; although he expressed confidence that the courts would rule in Government’s favor.
Financial Secretary Waight said that the sale of shares should be open until the end of the year, unless the shares are fully subscribed before.
The Ashcroft group, from which the government took the BTL shares last year, has pursued international arbitration challenging the nationalization. The Prime Minister said that the Ashcroft side has claimed that the company’s value is US$300 million—twice the valuation upon which the sale of shares is based.
The Government, in the course of the nationalization, had also acquired a $45 million debt with the British Caribbean Bank, an Ashcroft bank, as well as a $20 million package of debt held by Sunshine Holdings to the Belize Social Security Board and Central Government. Payment of interest on the $20 million loan package is due to begin at the end of this month.
The Government and BTL have taken the stance that the $45 million debt was illegal. The BTL directors could not take out such a loan for the company to buy its own shares, according to BTL executive chairman Net Vasquez. Vasquez also outlined a procedure that involves a court application, which, he said, would be necessary for a transaction like this, which, in his opinion, reduced the company’s capital.
Prime Minister Barrow said that the directors who ran BTL at the time should be made personally liable for the $45 million debt. Those funds were reportedly used to pay RBTT in Trinidad for the shares, held as collateral for a Jeff Prosser loan.
Government claims it had gotten expert opinion from London saying that the former directors should be held responsible for the payment.
The shares that BTL had purchased with the loan were apportioned to shareholders as a kind of dividend—94% to the Ashcroft group, the rest to minority shareholders, including the unions.
The union reps at the ceremony Friday expressed concerns about losing those shares, in light of Government’s position that the loan was illegal. Vasquez indicated that the shares of the unions would remain with the unions.
Government also announced that in line with the September 21 announcement, the Internet speed for BTL customers will be doubled (at the same cost to customers) on November 1.