While the government continues its battles with ICC over the privatization of, in a 360 degree turn, government today announced that it is buying back Belize Water Services Limited.
A government release states that today GOB and Cascal signed a share purchase agreement for 33 million shares representing some 82.68% of the company. The shares will be purchased for $1.50 for a total price of US$24.8, the same price Cascal bought them for in 2001. And while the announcement comes in August, the sale won't be finalized until October 3rd when government will make a down payment of US$14.9 million. Government will pay the balance of US$9.9 million in installments over the next four years at an interest rate of 10% per annum.
The release goes on to say that this agreement will bring to an end the current disputes between the parties. That is legal recourse that BWS had sought to get their 12% guaranteed return on investment that government legislated for them. The release states that the transition will in no way affect the way business is conducted or the status of the company's employees.
While the move is yet to be fully understood, questions that are to be asked immediately is where the financing for the purchase will come from, especially considering that government is currently cash strapped. Government says that once it acquires the shares, it will offer them to the Belizean public. But the public cannot come up with US$24 million, which begs the question: is government again fronting on behalf of a third party as was the case when GOB purchased the Carlisle shares to re sell them to ICC.
However that goes, today's agreement brings some closure to one of the most unhappy episodes in Belize's privatization history. From the outset Cascal felt that it had been sold a 'puss eena bag' because of inaccuracies in the prospectus. Government acquiesced to some of those inconsistencies when it guaranteed a $10 million loan to bail out Cascal's faltering investment in December of 2001.
