He runs the company like it's his, but Jeffrey Prosser does not own controlling interests in BTL. That could all change though because 7NEWS has confirmed that on Friday, the American businessman made a crafty corporate maneuver which would put him in BTL's driver seat and leave government and minority shareholders in the back seat, if not the trunk.
On Friday, Prosser's board passed a resolution to increase BTL's share capital by 24 million shares. The resolution states that those shares would be sold for one dollar each to Prosser's parent company, Belize Telecom Limited. One dollar being only 17% of the present market value of about $6.00 - so he would get it for about one-sixth of the value. We say, "would" _because though the board approved it, it will also need approval from a special general meeting.
What's the consequence of this maneuver? Well it would boost Prosser's holdings from 26% to 54% for, again, one sixth of the price he'd have to pay if he paid present market value. That's one thing, but another is that the new share issue dramatically drives down the value of everyone else's shares. How dramatic? Well, our calculations say, everyone's shares would be worth 20% less with this new share issuance. In the view of some, it's a fraud on the minority including, now the government whose Carlisle shares, which previously represented 52% of the company, would now be worth only 32% of the company. So, those Carlisle shares which were once represented controlling interests are that no more, as the new share issue would automatically give Prosser the controlling interests, 54% of the company, to be exact.
The consequences of this are myriad, but most directly, government which is holding the share certificates for the Carlisle shares to make sure Prosser pays, finds that it would just be holding a lot of minority papers that can't really force Prosser to do anything. That's because Prosser no longer needs those shares to control the company and that means that he doesn't have to be in any hurry to pay off the US$57 million that he promised to pay government 8 months ago. Government, you will recall is still the guarantor on that loan.
So why would government agree to end up in such an injurious position? Well, it's that magic word again: "Intelco". As we understand it, the resolution taken to the board on Friday states that the US$12 million Prosser will pay will be used to buy over Intelco's assets, thus paying off the moribund company's loans, loans that are guaranteed by social security and the government of Belize.
That's a standing political emergency and it's apparent now that government will permit just about anything to get the Intelco monkey off its back, perhaps even stand by and witness at a worst, a defrauding of the minority and itself and at best a mass dilution of the value of everyone's shares. Of course, as we noted this new share offering still has to be approved at a special general meeting and its apparent that minority shareholders who feel they would be defrauded may be ready to take up a legal challenge so its clearly a situation we'll have to watch as it develops.
