The general meeting of the Building & Loan Association (BLA) last Thursday approved a recapitalisation plan that aims to raise EC$39 million for the beleaguered building society.
The plan, to which some members objected, will see each members being required to hold a minimum of 100 shares, at a nominal value of EC$10 dollars each — an EC$1,000 investment.
“… recapitalisation plan, as we map it out for you, is one that attempts to ensure that there is equity in the way we approach the recapitalisation of the organisation,” Deputy Executive Director of the Financial Services Authority and acting CEO of the BLA, Eleanor Astaphan told the meeting.
“In order words, if there are losses to be had, then it has to be had by all persons. If there are gains and saving to be had, then it has to be had by all members,” she said.
The sources of recapitalisation are as follows:
1. Top-up of existing permanent shares to reach the new minimum required (1,000). There are 10,805 permanent shares holders in this category who hold permanent shares for a value of EC$2,975,720. The additional shares purchase will generate an estimated EC$7,829,280.
2. Partial conversion of matured redeemable share unclaimed: There are 171 members who hold redeemable shares for a total of EC$1,459,369.96, which have matured and have not been claimed. EC$1,000 will be converted into permanent shares from the holdings of each account. If the holding is less than EC$1,000, the member will be asked to make up the difference in cash or with existing deposits. If the holding is greater than EC$1,000, the member will be credited the excess in a fixed term deposit account. This will generate an estimated EC$171,000
3. Partial conversion of active redeemable shares: Similar to “2” but that the partial conversion will be of active redeemable shares. There are 6,958 accounts with a total balance of EC$40,080,668.54. This will generate an estimated EC$6,598,00
4. Conversion of delinquent redeemable shares: there are 12,813 accounts of members holding redeemable shares with an average holding of EC$1,154 for a total of EC$14,783,356.85. These accounts are delinquent as payments have not been made for six months or more. All these accounts will be converted into permanent shares. If there is a shortfall between the actual member holding and the EC$1,000 minimum, the member will be asked to make up the difference in cast or by debit to any deposit account s/he may hold. This will generate an estimated EC$14,783,356.85
5. Regular savings deposit accounts: There are 520 regular shavings deposit account with a total balance of EC$907,640.15. No conversion will be requested from these members, but in order to continue to maintain their membership and to hold their saving account, they will have to (a) buy the minimum of permanent shares or (b) pay the quarterly membership fee.
6. Special deposit accounts – Segment 1 (Balance of greater than EC$5,000 but less than EC$100,000): There are 2,946 accounts with ta total balance of EC$49,586,779.85 and an average balance of EC$16,831.90 per account. And amount equal to 2.5 per cent of the special deposit account balance will be converted into permanent shares, and the excess balance will be credited to fixed term time deposits. This will generate an estimated EC$1,139,669.49
7. Special deposit accounts – Segment 2 (Balance of greater than EC$100,000 but less than EC$500,000): There are 306 accounts with a total balance of EC$59,877,016.60 and an average balance of EC$195,676.62 per account. And amount equal to 5 per cent of the special deposit account balance will be converted into permanent shares and the excess balance will be credited to the fixed term time deposits. This will generate an estimated EC$2,993,850.
8. Special deposit accounts – Segment 3 (Balance of greater than EC$500,000): There are 62 accounts with a total balance of EC$54,007,151.56 and an average balance of EC$871,983.09 per account. And amount equal to 10 per cent of the special deposit account balance will be converted into permanent share, and the excess balance will be credited to fixed term time deposits. This will generate an estimated EC$5,400,715.56
Total: $39,275,871.90
In commenting on the plan, Sharda Bollers, executive director of the FSA, said that the choice was the best option and if it weren’t approved, the alternative would have been to liquidate the BLA.
Meanwhile, Astaphan further spoke of the indigenous nature of the 72-year-old building society and said that the plan was crafted with this in mind.
Keeping the BLA as an indigenous financial institution is “an honourable ideal”, Astaphan said, adding that that comes with “a responsibility” and “a price”.