Uncertain future for Building and Loan

User Rating:  / 0

Details

Parent Category: Aug 2011

Category: Week ending Aug 20th, 2011

Published on Sunday, 28 August 2011 18:13

Hits: 2620

The Grenada Building and Loan Association is facing an uncertain financial future due to its failure to recover a $15 million investment it had with financially troubled British American Insurance Company (BAICO).

Newly appointed Judicial Manager for the Building & Loan, that is a household name in Grenada, Rupert Agostini told The New Today Newspaper that indeed there is a liquidity problem facing the 85-year old Association that was close to insolvency.

Agostini who was appointed as Judicial Manager by the court on July 20 following a petition from the Grenada Authority for the Regulation of Financial Institutions (GARFIN) was given 14 days after his appointment, to provide a report to the court on the financial condition of the Association.

The report that was filed last week Friday confirmed that there is a serious liquidity problem facing the local financial institution. The Judicial Manager is mandated to report to the Court within 30 days of his appointment indicating which course of action would be most advantageous to the general interest of shareholders and depositors.

The Chartered Accountant with over 40 years experience hinted that he will recommend to the court that the Association looks at two options in order to remain in business. He is recommending that the business be transferred or enter into a joint venture partnership with another entity, or have the entire business restructured.

Shareholders first became aware of the Association’s financial problem during an extra-ordinary meeting that took place on May 3. This newspaper was told by General Manager Byron Campbell that over 65 members approved a plan for the financial restructuring of the Association as a result of BAICO’s inability to honour the $15 million investment with Building & Loan.

Campbell said some of that investment had already matured since last year, and to date the Association has not received any money from the insurance company.

The total investment loss is estimated to be in excess of two million dollars. The financial restructuring agreed upon was to convert part of shareholders ordinary shares into preferential shares for those who bought shares prior to December 31, 2010.

Agostini said shareholders are now being permitted to withdraw a minimum of $1,000.00 and those who ask for more would get consideration based on its merit.

The Judicial Manager said since his appointment he has constantly been bombarded by calls and visits from a number of shareholders and often had to explain to them the process of his job. “At one time about nine of them appeared in my office (at the) same time,” he remarked.

According to Agostini, his job is to restructure the financial institution and try to find an option for the way forward. He said the process is to try and find a resolution to the problem encountered with the BAICO’s investment, which went sour.

“That killed them (Building & Loan) as far as liquidity is concerned, so we’re trying to find a replacement in order to enter some other option,” he added. Agostini indicated that at this time all he can do is ask shareholders to bear with him for about three months when a much more detailed plan will be unveiled.

• < Prev
• Next >