On Friday, February 28, Prime Minister Hon. Dean Barrow announced to the nation that all stakeholders in the citrus industry had signed off on a Memorandum of Understanding that should solve the flagship company’s cash flow crisis and settle its executive level tug-of-war. A new Board of Directors will be configured for the Citrus Products of Belize Limited (CPBL) to include representation from the Citrus Growers Association, Banks Holdings Limited, the Government of Belize, the Social Security Board and Heritage Bank Limited.
Two weeks ago, Prime Minister Barrow bridged negotiations between key stakeholders in the citrus industry in an effort to dissolve longstanding disputes that drove CPBL to the brink of collapse. The working capital for CPBL dried up after the commercial banks decided not to release any more money until the company could provide audited figures of its operations, which it was unable to do because the Citrus Growers Association (CGA) and its strategic investor, Banks Holdings Limited, could not agree on an auditor. Without working capital, CPBL could not pay farmers for their fruits and the company would’ve had to discontinue operations.
Prime Minister Barrow convened emergency meetings and teleconferences with major players in the industry and was able to stabilize the company’s financial position within a few days. On Monday, February 17, the stakeholders of the citrus industry attended a press conference in which Prime Minister Barrow outlined proposals for the way forward and announced that First Caribbean International Bank had agreed to forward $2 million to CPBL so that operations could continue at the factory while the details were ironed out.
Immediately after the press conference, Anthony King, Chairman of the Board of Banks Holdings Limited, arrived in Belize and participated in negotiations with the Citrus Growers Association, Citrus Mutual, The Government of Belize, Social Security Board (SSB) and Heritage Bank among others. Representatives of each parties negotiated to ensure that their interest were protected, but more importantly, to provide a solid framework for the long term viability of the company and industry.
The result of the negotiations led to an MOU in which Government will provide financing for the buyout of CPBL’s US$7.5 million loan facility with First Caribbean International Bank. Government will also inject an additional $4 million into the company as working capital so the company can pay what is owed to farmers and finance its operations going forward. Pending Board approval, the Social Security Board will then assume that loan totaling some $19 million. Also pending Board approval, the Citrus Growers Association has requested that the Social Security Board convert its $9.1 million loan to shares into CPBL. CGA owns 51 percent of CPBL. $9.1 million would be equivalent to almost 10 percent of the company. Therefore, the new share split will be 46.5 percent for Banks Holdings Limited, 41 percent for the Citrus Growers Association, 10 percent for the Social Security Board and 2.5 percent for other small shareholders. The new Board of Directors will include seven Directors: two from the Citrus Growers Association, two from Banks Holdings Limited, one from Social Security Board, one from Heritage Bank and 1 from the Government of Belize.
Prime Minister Barrow says he doesn’t expect the power struggle between Banks Holdings Limited and the Citrus Growers Association to be as disruptive as recent years because “there is the recognition that we hang together or we will hang separately”. Prime Minister Barrow explained that the parties enter into the agreement “understanding that government – or ultimately SSB – together with the other lender, Heritage Bank, would be in a position then to pull the trigger then on receivership and take [the company] completely out of any sphere of influence of either of the two major shareholders.” Denzil Jenkins, Chairman of CGA’s Investment Committee, says “the funds that are going to be used by SSB give SSB the opportunity of earning.” Jenkins says putting that money at the commercial banks would earn about 2.5 percent interest; whereas, the loan assumed by SSB will be serviced at a rate of at least 6 percent.
Prime Minister Barrow says, “In doing this, SSB together with the Government of Belize is acting in the best interest of the citrus growers, of the citrus industry, of the economy, of the national interest of our beloved Belize.”
Now that one crisis is solved stakeholders can work together to focus on the most serious threat to the industry, which is the citrus greening disease. Citrus greening was the main reason for the 35 percent decline in production of citrus fruits in 2013.
