Government has taken back BTL. Today, the Prime Minister ousted Chairman Jeff Prosser and CEO John Vondras. A new board of directors has been appointed; it is chaired by Financial Secretary Dr. Carla Barnett, and she is joined by a new CEO, long-time BTL Financial Controller Gaspar Aguilar.
The sudden move comes two days after Prosser defaulted on his commitment to pay government the US$57 million for the Carlisle shares, which represent 52% of BTL's shares. Prosser was first supposed to have paid for those shares at the end of April of 2004, and then had that extended to the end of August 2004, and then November 21st of 2004. But he defaulted on all those payments, and in November government had to go to the International Bank of Miami which loaned the money in the first place, to have the loan rolled over, which ended up costing a reported $17 million.
What will government do now? Well it may have gotten rid of Prosser for the time being, but it still has to come up with US$57 million in 13 days. If it does not, or does not find a new buyer who is willing to pay the bill, government would have to again roll over the debt at the International Bank of Miami, which would again be very costly. Also, rolling over the debt will add to government's debt profile and likely have a negative effect on international investors who may be looking to buy into a total of US$135 million in bonds presently being offered by Belize, money that government desperately needs to shore up its reserves and meet budgetary demands.
So, while government may have gotten rid of Prosser, and we stress that it is for the time being, as he may mount a legal challenge it still faces the $57 million problem which comes due in the next two weeks. It's a possibility that the government may be forced to turn back to past owner Michael Ashcroft for a bailout but government has not made it clear whether it would pursue that action.
And what action will Prosser pursue? Well because of the downright advantageous agreement and terms, that government granted him, we'd say he has a good case to pursue. The fact is that under the agreement, Prosser is entitled to mediation and arbitration and he did request mediation 8 days ago, a request, which as has been made clear by this action, government flatly refused. Whether Prosser will lap his tail between his legs and head home or hang around for a fight is unclear, but if he wants to fight he'll have to line up behind Michael Ashcroft who's taking government before British arbitrators to activate his buyback clause. Of course, even if Prosser does head home, he presumably does so taking the today profits of one year at BTL, which is at least $20 million after taxes. And he got that year of control without ever having paid for the controlling interests. Prosser has paid US$30 million for Social Security's 28% holding which keeps him around as a very interested and likely very ticked off minority shareholder.
It's a bonfire of government's bad and reckless deals and it'll clearly be a few weeks before the dust settles and any winners are declared.