Lord Ashcroft, the Conservative Party donor, is fighting to stem mounting losses at his Caribbean banking business, amid an economic downturn and political turmoil in the region.
The billionaire financier's stock market-listed company has disclosed that it lost $13.6m (£8.5m) in the last three months of 2011, with red ink spreading at his historic operations in Belize.
He has also recently appointed a loan-restructuring expert to chair his operations in the nearby Turks and Caicos Islands (TCI), a British-run archipelago where his bank had backed major hotel and residential developments.
BCB Holdings, whose shares are languishing near all-time lows on the London Stock Exchange's alternative investment market, said that its Belize-based banking operations lost $2.4m in October, November and December, compared with a $1.3m loss in the same period of 2010.
The remainder of the losses is related to the non-Belize operations, before Lord Ashcroft took the radical step of splitting his company in two. The TCI operations became a separate company last October, leaving BCB Holdings focused on Belize. The new TCI-focused company – which Lord Ashcroft has called Waterloo Investment Holdings – does not trade on the stock exchange and is not required to make the same level of financial disclosures. The peer has incorporated Waterloo in the British Virgin Islands.
Waterloo's subsidiary, British Caribbean Bank Ltd, has had to write down the value of millions of dollars of loans in the TCI, where a sharp reduction in tourism and a corruption scandal that prompted the British to impose direct rule has upended the local economy.
The value of Waterloo appears to have plunged since its inception last October. Shareholders have been told they can sell their stock through a brokerage in London called JP Jenkins, but repeated attempts by the broker to find buyers for unwanted shares failed. After asking 88p per share in November and 70p in December, JP Jenkins found a buyer at the end of January at 42p.
Earlier this year, Waterloo appointed its first chairman and chief executive, Caroline van Scheltinga, a financial-restructuring expert who previously worked as a banker at Wall Street firms including Lehman Brothers and Jefferies & Company Inc. Her role includes trying to recover as much money as possible from the company's delinquent loans, either by restructuring the repayments or taking over the underlying developments. "The real-estate downturn hasn't left the region untouched," she said in a statement to shareholders announcing her appointment. "The Turks and Caicos Islands, however, is one of the most exquisite destinations in the Caribbean and – having welcomed one million visitors during 2011 – it is experiencing one of the highest tourism-growth rates in the Caribbean. Investment dollars are returning to the region."
Andrew Ashcroft, the peer's son, quit the board of BCB Holdings to sit on the board of Waterloo. Mr Ashcroft is managing director of the TCI bank. Lord Ashcroft no longer sits on the board of either company, though he still controls a majority of shares in both.
Waterloo says it has close to $600m in investments in the Caribbean and Central America that focus on financial services, hotel management, land and resort development, growth and infrastructure investments.
The British Foreign Office suspended the islands' government and imposed direct rule in 2009 after a commission of inquiry found widespread corruption by ministers, including the former Prime Minister Michael Misick.
Lord Ashcroft was not accused of any wrongdoing by the commission of inquiry. He is taking legal action against The Independent over two reports on his business interests in the TCI from November 2009.
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