By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Water & Sewerage Corporation’s “financial difficulties” caused the sums it owes to BISX-listed Consolidated Water to jump to $7.6 million at year-end 2012, it was revealed last night, with the company refusing to obtain a performance bond until this amount was paid.
The disclosure, contained in Consolidated Water’s annual 10-K report filed with the Securities & Exchange Commission SEC), shows just how hard it will be for the Christie administration to rein in subsidies to cash-strapped corporations such as Water & Sewerage.
Large accounts receivables balances owed to Consolidated Water have become a regular occurrence for the Water & Sewerage Corporation, and the BISX-listed company said this debt accounted for $3.2 million of the $8.5 million in its total accounts receivables, which grew from $4 million to $12.5 million.
Given that the Government is effectively guaranteeing the Water & Sewerage Corporation’s debt, Consolidated Water is making no provision for the accounts receivables.
“From time to time, Consolidated Water Bahamas has experienced delays in collecting its accounts receivable due to financial difficulties experienced by the Water & Sewerage Corporation,” the company reiterated.
“Consolidated Water-Bahamas was due approximately $7.6 million from the Water & Sewerage Corporation as of December 31, 2012. Representatives of the Bahamas government have informed us that the delay in paying our accounts receivables is due to operating issues within the Water & Sewerage Corporation, that the delay does not reflect any type of dispute with us with respect to the amounts owed, and that the amounts will ultimately be paid in full.
“We believe that the accounts receivable from the Water & Sewerage Corporation are fully collectible and therefore have not provided any allowance for possible non-payment of these receivables as of December 31, 2012.
While Consolidated Water is required to provide the Water & Sewerage Corporation with performance and operating guarantees, given that it is supposed to supply 16.8 million gallons and 63 million gallons per week, respectively, from its Windsor and Blue Hills plants, no performance bonds are currently in place.
A $1.91 million performance bond for Windsor has expired and not been replaced, while Consolidated Water expects “to obtain a performance bond for the Blue Hills plant once Consolidated Water-Bahamas has received payment of its delinquent accounts receivable from the Water & Sewerage Corporation”.
The Water & Sewerage Corporation accounts for 44 per cent of Consolidated Water’s revenues, and the BISX-listed company confirmed that its 15-year water supply agreement for the Windsor reverse osmosis plant expires in May.
The company also confirmed Tribune Business’s report that it is seeking a five-year extension to that supply agreement, although it faces competition from a Bahamian investor group headed by former Water & Sewerage Corporation chairman, Don Demeritte.
Interestingly, Consolidated Water’s SEC filing made no mention of, and gave no update on, the fate of its proposed $14 million, 50/50 joint venture with New Providence Development Company to supply water to western New Providence under a franchise agreement.
That deal was described as “null and void” by the Water & Sewerage Corporation late last year, something the two companies disputed.
Elsewhere, Consolidated Water took a $432,727 impairment on the value of its Bimini plant, reducing this to estimated fair value because the “carrying value” of the asset was not likely to be recovered from future undiscounted cash flows.
The Blue Hills plant’s late 2011 expansion to 12 million gallons per day increased the volume of water sold by Consolidated Water’s bulk operations by 32 per cent in 2012, generating a $10 million revenue increase.
Comments
Use the comment form below to begin a discussion about this content.
Sign in to comment
Or login with:
OpenID