Feb. 11, 2005 Innovative Communications Corp. LLC, and its owner Jeffery Prosser have reached an "impasse" with the Belize government over a telecommunication company that Prosser was seeking to acquire in the Central American nation.
On Wednesday, the government of Belize took back control of Belize Telecommunications Ltd. after Prosser allegedly failed to pay $57 million plus interest owed in the sale of the telephone company, according to one of the nation's media Web sites www.chanel5Belize.com.
In March 2004, Prosser had signed an agreement with the Belize government to pay $57 million to take control of 52.5 percent of Belize Telecommunications Ltd. from the government, which had purchased the controlling shares of the company in February from Carlisle Holding Ltd. for the same price. (See "Innovative to Buy Belize Communications Firm").
Although Prosser had not paid the agreed amount in full, ICC LLC was given the go-ahead to take over the management of the Belize telephone company based on promissory notes that Prosser had issued to the government.
The government of Belize gave ICC until Nov. 22, 2004 to pay for the shares, but the company failed to come up with the money. According to the Channel 5 News site, after a request by Prosser through his attorney Lanny Davis in December, ICC was granted a 75-day extension from the expired deadline to "make good on the default," the report says.
However, as of Monday — the expiration of the extension — ICC LLC had made no payments to the Belize government.
In response to queries by the Source, Holland L. Redfield II, vice president of Innovative Communications Corp., said Thursday, "We had an impasse with the Belizean government, but we're working things out."
Redfield would not comment further on the situation.
Channel 5 News reported that the Belize government, "has taken control of the management of BTL, and a new board of directors has been appointed."
The Belize Telecommunications story is a tightly interwoven trail of complicated finance, debt and broken promises that stands to impact not only the people of Belize, whose government had borrowed $57 million from the International Bank of Miami to acquire the shares that ICC promised to pay for, and whose Social Security system is tied in with the financial fate of BTL, but the people of the Virgin Islands, as well.
Last year Vitelco, known also as Innovative Telephone, an ICC subsidiary, issued $85 million in preferred stock without notifying ICC's major lender, the Rural Telephone Financial Cooperative, or the V.I. Public Services Commission and loaned at least $30 million of the proceeds to its parent company to fund the acquisition of the Belize company, according to representatives of RTFC.
Davis, in a September hearing before the local PSC, told the commission, "Not only will that loan be repaid, but it will be repaid early." (See "Phone Company Could Have New Owner in January").
However, PSC Chairman Valencio Jackson said Thursday, "To my knowledge, it has not been repaid yet. At this present time, we have not heard from Innovative whether it has been paid."
Redfield confirmed Thursday afternoon that the loan had not yet been repaid as promised by ICC attorney Davis.
"It will be repaid, and it has been a good investment for Vitelco," Redfield said. "They are not in jeopardy at all."
Davis made similar promises to the Belizeans in December, according to News 5, when he appeared on behalf of Prosser at a meeting in Belize. "We have every confidence that the total of $89 million that was the purchase price for the system that Mr. Prosser agreed to in the form of two promissory notes will in fact be paid."
The $89 million figure is the $57 million, plus interest, for shares previously owned by Carlisle Holding Ltd., plus another roughly $29 million to purchase the Belize government's remaining shares.
Jackson said he plans to take up the issue on Feb. 24 at the PSC's monthly meeting when Innovative Telephone is scheduled to appear before the commission. He added that one of the reasons for the commission not having had monthly meetings recently is the pending case between Innovative Telephone and the RTFC in District Court in the V.I.
RTFC had filed suit against the phone company in Virginia after ICC issued the preferred stock without informing RTFC, which was a breach of the contract between the two companies, RTFC said.
ICC appealed to the Virginia court to have the case moved to the V.I., and the court agreed.
"If ICC loses, they will lose the telephone company, and then we won't be able to touch them," Jackson said. He added because the PSC does not regulate ICC, but just the phone company, the commission would not be able to file suit against the company for taking the money from Innovative Telephone for use outside the territory.
However, what use was made of the money obtained from the sale of the preferred stock seems unclear since the Belize government has revealed they have not received the money owed from ICC LLC.
The phone company recently justified its application for millions of dollars worth of tax breaks under the Economic Development Commission program, citing the need for cash in order to make needed capital improvements to the telephone system's infrastructure.
Belizeans and the Virgin Islanders are not the only potential losers in the game of high finance being played out between the V.I. and Belize. The minority stockholders of ICC's predecessor Emerging Communications Inc., who recently won a civil suit against ICC, could also be impacted.
The stockholders filed a suit against Prosser for, among other things, knowingly undervaluing the worth of EmCom's stock when he took the company from a public entity to a private corporation in 1998.
Judge Jack B. Jacobs of the Chancery Court in the state of Delaware, where Prosser's Emerging Communications was incorporated, found on behalf of the shareholders last May. . (See "Prosser Ordered to Pay Millions to Ex-shareholders").
According to the complex 15-page settlement agreement between ICC and Greenlight Capital L.P., an investment firm, and Brickell Partners, filed in the Delaware Chancery Court on Feb. 2, ICC told the court, it would assign the rights it has under a "certain lease agreements with Belize Telecommunications Ltd." as security to a pair of promissory notes totaling $49.5 million as part of the settlement agreement between ICC and the former EmCom shareholders.
The Chancery Court judge in the Greenlight matter has not yet signed the settlement agreement.
Along with ICC LLC, Prosser owns several subsidiaries in the territory through ICC, including: The Virgin Islands Daily News, Innovative Cable, cable television station TV2, Innovative Telephone and V.I. Powernet. Prosser also owns the V.I. Community Bank.
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