BLA members approve recapitalization plan

A recaptilization plan, which should see the St Vincent Building and Loan Association (SVBLA) realizing the over $39 million needed to turn the Association around, has been conditionally approved by members.{{more}}

The plan, presented by deputy executive director of the Financial Services Authority (FSA) and Acting CEO of the SVBLA Eleanor Astaphan, at the SVBLA AGM on August 29, identified eight sources of funds to recapitalize the Association.

Astaphan said, as it stands, the Building and Loan Association is not a going concern and the plan seeks to build the capital and improve the liquidity of the Association.

All members will now be required to hold a minimum of 100 Permanent Shares at a nominal value of $10 each. There are 10,805 members who currently have fewer than 100 Permanent Shares, with a total value of $2,975,720. These members will be requried to purchase additional shares to bring their shareholding up to at least 100. The topping up of existing Permanent Shares should realise $7,829,280.

The second source of funding will be from the partial conversion of matured redeemable shares which have not been claimed. There are 171 members who hold matured, unclaimed Redeemable Shares for a total amount of $1,459,369.96. The plan proposes that EC$1,000 from the holdings of each account will be converted to Permanent Shares. If the holding is less than $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 Time Deposit Account. This aspect of the plan is expected to realise $171,000.

The third aspect of the plan proposed that all delinquent Redeemable shares be converted to Permanent Shares. There are 12,813 such accounts, with an average holding of $1,154 for a total of $14,783,356.85. These accounts were deemed delinquent, as payments have not been made for six months or more. It was also proposed that if there is a shortfall between the actual member holding and the $1,000 minimum, the member will be asked to make up the difference in cash, or by debit to any deposit account held. This aspect of the plan generated the most discussion, with many members strongly objecting to all of a member’s delinquent Redeemable Shares being converted to Permanent Shares. Members proposed that instead, $1,000 maximum, be converted, and the balance converted to a Fixed Term Time Deposit Account. The FSA promised to consider members’ suggestion. When members voted to approve the recapitalization plan, they did so on the condition that consideration be given to their proposal.

For the 6,958 members with active Redeemable Shares, if those persons now own less than $1,000 in Permanent Shares, the amount by which they are short, will be converted from their Redeemable Shares to bring their Permanent Shares up to the minimum required. If the amount of Redeemable Shares is less than what is needed, the member will be asked to make up the difference. This aspect of the plan is expected to result in $6,958,000.

There are presently 520 Regular Savings accounts with a total balance of $907,640.15. No conversion will be requested from these members, but in order to continue to maintain their membership and to hold their Savings Accounts, they will have to buy the minimum number of Permanent Shares or pay the quarterly membership fee.

There are 2,946 Special Deposit Accounts with balances between $5,000 and less than $100,000. The total balance of this category of accounts is $49,586,779.85, with an average balance of $16,831.90. An amount equal to 2.5 per cent of the Special Deposit account balance will be converted into Permanent Shares, and the excess balances will be credited to Fixed Term Time Deposits. This aspect of the plan is expected to realise $1,139,669.

There are 306 Special Deposit Accounts with balances greater than $100,000, but less than $500,000. The total balance of these accounts is $59,877,016.60, with an average balance of $195,676.62. An amount equal to 5 per cent of each of these accounts will be converted into Permanent Shares, and the excess balances will be credited to Fixed Term Time Deposits. This aspect of the plan is expected to realise $2,993,850.

Special Deposit Accounts with balances greater than $500,000, will have an amount equal to 10 per cent converted to Permanent Shares, with the excess balances credited to Fixed Term Time Deposits. There are 62 such accounts with a total balance of $54,007,151.56, and an average balance of $871,983.09. This aspect of the plan is expected to realise $5,400,715.56.

The total estimated recapitalization amount is $39,275,871.90.

The Fixed Term Time Deposits have been proposed to replace Special Deposit Accounts and will be offered in fixed terms of six, 12, 18 and 24 months, subject to approval by the new board of

directors.