Last word we had on the Belize Water Services Limited was that the employees would use their pension scheme to leverage a Social Security financed buyout of 51% of the water company. It was a deal that was praised on all sides, but it's fallen apart apparently because projections say BWSL cannot earn enough money for the new owners to comfortably service their Social Security loan.
But if the workers can't buy it, Social Security might still have to, because part of the BWSL buyback, US$10 million, was financed by the previous owner, Cascal, and government has to pay them back. It's has all the makings of another utility debacle - a la BTL. Now with the government's pressing obligation to meet its external obligation, the money has to come from somewhere and 10 times out of ten that somewhere is the Social Security Board. CEO of the Social Security Board admitted that they are indeed looking at buying the shares.
Narda Garcia, CEO - Social Security Board
"We received a request from the BWSL employees for a loan to buy 51% of the shares of BWSL and the Board n principle had approved the loan to the BWSL workers. However it has taken a bit long and they are back and forth. They have some issues that they need to iron out with GOB and among themselves and we are also looking at the possibility to purchase that loan and then subsequently sell to the BWSL workers when they are ready and able to buy."
Alfonso Noble,
Is the purchasing of the loan at the behest of government in that they service financing for previous loans they had made on the company and other financial commitments? Is this the reason why Social Security is being looked at to purchase this loan, before the employees actually get a hold of it?
Narda Garcia,
"I don't know if that is the reason, that hasn't been said to us. But I know that the GOB has to dispose of these shares and that SSB is being looked at as the possible institution that could buy the shares in the interim."
Alfonso Noble,
Are they looking at Social Security as a slush fund whereby if there is any cash crunch, any need for immediate financing, we look at the SSB. This is what it looks like. Can you say if this is so or not?
Narda Garcia,
"I think that SSB needs to invest its funds and we have to look at the different possibilities that exist and we all know for a fact that the market in Belize is very limited. So the Board is looking at different options. We haven't decided on the BWSL. A subcommittee of the Board has been formed to look, to do proper due diligence, to look at all the advantages and disadvantages of investing in BWSL and then the Board will take a decision on what it is to do."
Alfonso Noble,
Is the board being leaned upon by the government?
Narda Garcia,
"I don't think so. A request and a proposal has come forward and the Board is discussing it."
Alfonso Noble,
No certainty to tell us when this might happen, when if or if not you will buy the BWSL shares?
Narda Garcia,
"No we are not looking at a target time yet. But I am that by next week we can start discussions with the subcommittee of the Board and we will be getting technical input from our staff at the investment department, from our external auditors, and from our legal advisors.
There is a great possibility that we may buy, still thinking about the BWSL workers or the employees that would want to come in later on and buy a portion or the entire 51%."
