Wednesday, October 27, 2010



The government of Belize is offering ( tongue in cheek ) a little over 22 million shares of BTL stock for a fixed period of time, from November 1st to December 31st. Or for a limited period of two months. The price ASKED is $5 a share.
A lot of factors have changed since the NATIONALIZATION of these BTL shares by the PRIME MINISTER/FINANCE MINISTER/PARTY LEADER, Dean Barrow. There is no longer a government subsidy to guarantee any investor in BTL stock a 15% dividend return. In fact, at $ 5 a share as offered and an expected initial return of a net profit of around $15 million a year, and of which 45% of this net profit is promised as a dividend ( can you trust a politicians promise? ) The dividend calculates out to about 2.4% dividend per share. This may rise as the years progress, TRUE. Still this calculation puts the TRUE VALUE of the company shares at PAR which is $1. So these shares are worth give or take, 5 cents, around $1 a share, the original forming of BTL PAR VALUE. There is a discrepancy of $4 between the TRUE VALUE and the ASK price of $5. In the stock trades parlance, we call this $4, the SPREAD. This is what the MARKET MAKER wants to make a profit. This is a huge spread.
So what is the Prime Minister doing?
In essence what the PRIME MINISTER is doing, is taking out any PRICE/ EARNINGS GROWTH before it happens. Roughly 15 to 20 years growth expectations, you could realize if the shares increased in value, due to the success of the company BTL and increase in population, more cell phones and such, and bigger customer base. So if YOU, or I, the buyer pay $5 for these shares, we cannot fairly realize any increase in the value of these shares over the next 15 to 20 years. The only return we could expect for this investment is dividends. Starting at 2.4% dividend, it is still unlikely that you would get a better dividend rate, than a bank C.D. even given 15 years passage and growth in the company. Bank C.D.s are LIQUID. Meaning, in a financial emergency you can cash them in. BTL shares are not tradeable as the political setup exists right now. The shares have no liquidity. BTL has been used in the past and is being used right now as a political football and the guesses go from legal fee generation for politicians with law firms, to bribes, to campaign donations solicitation. If you love conspiracy theories, BTL SHARES and the ownership thereof is ripe for a dozen books over it´s history of political manipulation in Belize.
The only potential for profit is if you experienced a takeover campaign by somebody, like Lord Ashcroft, or Prosser, or some other companies, trying to accumulate sufficient shares to control the BOARD OF DIRECTORS and the company, currently controlled by whichever political party owned BELMOPAN and the parliament for a 5 year term of office.
An investor then is presented with a dilemma. The $5 a share is not attractive as an investment, unless you are naïve and not savvy about such things. Therefore one has to presume the Prime Minister DOES NOT WANT to actually sell any BTL shares to the public, or give any shares to employees of BTL either. The bombast and rhetoric is pure political hype apparently? For political purposes one can see the necessity to actually go through the play acting of trying to sell shares, and if somebody was stupid enough to pay $5 a share, then okay! The icing off the cake will have been subtracted anyway.
As an investment, the $1 par value is a good starting point. There is the problem of legal ownership of these shares and the costs associated with numerous lawsuits now in the courts going to continue. As an investor you would not know the results of these court cases and they are years down the road anyway. So you DISCOUNT the RISK and offer a lower price than the TRUE VALUE of $1 PAR, to factor in the RISK to your investment. The PUP CONVENTION last week is another factor and the history of the PUP has been they will reverse the NATIONALIZATION and return BTL share ownership to Lord Ashcroft companies, in return for legal work and campaign financing. Not counting SECRET AGREEMENTS, government subsidies, tax write-offs of the past historical record. So there is considerable RISK which lowers the price value of BTL shares being offered by Prime Minister BARROW even more. What you discount that risk for, is up to the individual investor. Not only that, the UDP are probably going to accept campaign financing through ASHCROFT shell companies as well, in return for WHAT? Which makes the idea of a bloated $5 a share ASKING price even more dubious, as a real sincere intention to actually sell any BTL shares. We don´t believe it ourselves.
There is the problem of compensation to ASHCROFT for nationalization. The worth of BTL is whatever shares have sold for and that is ALL any court of law will find as TRUE VALUE. Boyce the Ashcroft man, is claiming $600 million worth for BTL and Prime Minister Dean Barrow has said that $300 million is the compensation value. The REAL VALUE is what somebody will pay for those shares and at the current PUBLIC BID prices, at this writing of .80 cents a share, is about $17.6 million and dropping like a rock. As a trader of shares in companies done two or three times a week, I expect the price value of the BIDs for BTL shares to probably bottom out around between .25 cents and .36 cents a share. There is still too much BAD NEWS coming down the road for BTL. The old adage is SELL your shares on BAD NEWS and buy them back when the BAD NEWS is discounted. The political machinations involving BTL are even more complex than that and Machieveli has some great followers in the political parties of Belize.

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