Saturday, September 3, 2011
BELIZE SUGAR INDUSTRY SHAKEUP HEATS UP
BELIZE SUGAR INDUSTRY HEATS UP, A SHAKEUP IS COMING TO THE INDUSTRY.
Some Mayan scholars say there has been a miscalculation for the date of the Mayan Calendar, that the actual end is THIS YEAR, December, 2011. A time of new beginnings. It sure looks like the Mayan´s were right. The Belize sugar industry is going to get a big shake up, and probable modernization, new orientation to marketing.
Banco Atlantida from Honduras are the front runners in buying out BSI. For BSI investors and stockholders, the Banco Atlantida deal is the best on the table, if it can be consummated BEFORE the end of the month. Otherwise the paradigm changes. A Foreclosure means bankruptcy and shareholders will lose their shares. Forget past dividends owing. New slate for everybody. Out with the 60 / 40 split with existing Sugar Associations. A new deal will be put in place, that is a foregone conclusion. Maybe not for the immediate next crop, but that will certainly be the end. That sharing ratio has been what bankrupted BSI, along with the inability for Cane Farmers able to produce enough cane with quality using old manual methods.
Mechanization is certainly coming in and existing producers will have to buy combines, or whatever is used to harvest cane under mechanization. They can do it cooperatively. One of the delightful things to see this month, has been the QUICK response by the sugar associations to authorize and appoint a technical financial team to find financing for them, to buy the financially strapped BSI sugar factory. They have acted I think about 8 years too late. Their financial team is composed of: David Gibson, Giovanni Diaz, Oscar Alonzo, Manual Herrera. CEO of the BSI factory, Montalvo, says the growers are out of touch with reality. Growers are used to a colonial monopoly and constant government intervention financially, they now find themselves in a position were they have to do something for themselves. They are going to have to learn and learn fast. The Chamber of Commerce is against any government intervention and says Finance Minister Barrow agrees. Let the industry SHAKEOUT and modernize through market forces.
That said, their financial team is working against the clock with 3 weeks left until the ING foreclosure. ING itself is in financial trouble and must collect every penny in bad loans it can, to stave off bankruptcy itself. Montalvo says the mathematics is against the cane farmers. They can´t produce enough sugar to pay off the loans outstanding, even if they got financing, using their colonial production method mentality. A legal team is arriving this week, to aid this fledgling lately formed growers financial investment team.
Enter the new interested parties. The MEXICANS now modernizing the old Libertad Factory up in Orange Walk are interested in the BSI deal. The MEXICANS want to use the sugar and molasses to produce ETHANOL for the 100 million population MEXICAN MARKET. Local people, myself included decided that with the current laws of Belize, it would not be practical to produce ETHANOL under an interfering government system, that exploits permits and licenses to steal businesses, then the politicians give the new businesses, franchises, or permit to their relatives for a percentage cut off it. ( local controlling political corruption method with this colonial parliamentary model we use ) The Mexicans however can export their sugar across the border and process it into ETHANOL there, close by. One way to avoid Belize political shennanigans in business affairs.
It´s not worthwhile for Belizeans to build a BIG successful business. The politicians, will either EXTORT money from you as campaign donations, or steal the business, ( by controlling the permit and license process ) to give to their relatives and friends for SHARES of STOCK, or a percentage. This has always been a big DRAG depressing the economy and GDP in Belize.
The SUGAR GAME is heating up. The only question remaining, is it more advantageous financially to let BSI go bankrupt and into receivership and be bought back for much less than the debts. Or go ahead and take over BSI and buy it under current functioning conditions? Only the bean counters know that solution. That´s why they call it DUE DILIGENCE.
It is said, TATE & LYLE which is now owned by an American conglomerate is interested also. 3 weeks to go and then we see what will play out?
SUGAR PRICES ARE HIGH ON THE WORLD MARKET AND THERE ARE SHORTAGES ALL OVER THE PLACE. THE PROJECTED SUGAR COMMODITY PRICES ARE EXPECTED TO STAY HIGH, OR HIGHER, OVER THE NEXT TWO YEARS.
Posted by A Professional BEACH BUM retires in Belize! at 3:24 PM