22 June 2011

Belize dannys Fortis

Almost three years after Danny Williams’s Conservative administration in Newfoundland and Labrador expropriated Fortis’ electricity assets in the province, the government of Belize has taken a leaf from Williams’ playbook and seized Fortis’ interest in Belize Electric Limited.

Fortis held a 70% interest in the company at the time of the seizure.

Compensation for the expropriation has yet to be determined.

In related news, Standard & Poor’s is warning the Belize government that it may downgrade the country’s credit rating in the wake of the move.  According to Reuters:

"The final details of the acquisition and its impact on the government's debt burden and fiscal flexibility are uncertain. However, based on the information currently available, we believe that there is significant likelihood that we could lower the ratings to 'B-minus' upon the conclusion of this transaction," S&P said.

In its statement, S&P said Belize's general government debt as a portion of gross domestic product is already a high 85 percent, with the interest burden around 15 percent of its revenues.

“The proposed bill would allow the government to take over Fortis's share, with an estimated book value of $100 million," S&P said, which noted Fortis holds 70 percent of the company's equity.

- srbp -

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