BEL's annual general meeting isn't happening until May, but the company held an extraordinary general meeting yesterday. There, shareholders passed a special resolution to double the company's authorized share capital which, pending approval of the annual general meeting in May, will allow BEL to raise upwards of BZ$60 million in a new share offering. That money would be used for capital projects and upgrades.
The company will offer the new shares at par value of two dollars but only to existing shareholders. Those shareholders, and there are 1,500 small ones, can either buy in at that virtual giveaway price or make a profit by selling the rights for those shares. It is estimated that those rights could be worth about a dollar per share.
And while the 1500 small Belizean shareholders who own about 5% of the company do stand to make some money this way, no one group will benefit as richly as BEL's owners Fortis Inc., a hugely profitable multinational which gets to maintain and likely increase its equity in an increasingly rofitable company with an only minimal investment. Fortis currently owns 66% of the company and according to the CEO Lyn Young, the company will exercise all its share rights buy into the new offering, maintaining its majority holding. It will also offer other shareholders to buy their shares and the rights at a prescribed price.
For those not familiar with corporate finance, it's a fine point and one with implications for the public because shareholders that do not exercise their rights on the shares will see the value of their holdings diluted. That has a direct implication for the Social Security Board, which owns 26% of BEL and has two directors on the board, one of them the Chairman, Bobby Usher.
If Social Security does not exercise its right and invest $14 million to maintain its holding percentage-wise, it would lose the right to appoint two directors and the Chairman seats that are there to protect the public interest at the board level. But does SSB have the money to make the $14 million investment because it's been spending so much money to cover up government's botched privatizations. It loaned $10 million to Michael Ashcroft's Sunshine Holdings, and is spending another $35 million to help BWSL workers to get controlling interests in the water company, a maneuver facilitated largely because government needs to cover the debt it incurred when Bi-Water/Cascal forced it to buy back the water company.
It's a loaded and costly question for the Social Security Board but today Chairman Yasin Shoman told us that Social Security has the money and the board thinks it is a good investment and is prepared to spend the $14 million to maintain its standing. Social Security and Fortis will also be offering to buy rights and shares from other shareholders who want to cash out of BEL.
